- USD/JPY looks to be creating a head-and-shoulders pattern on the hourly chart.
- A break below 109.80 would confirm breakdown and open the doors for a pullback to deeper support levels.
USD/JPY is currently trading at 109.92, representing marginal losses on the day, having hit a low of 109.81 a few hours ago.
The minor recovery from session lows could be short-lived, as the hourly chart relative strength index is reporting a bearish divergence and the 4-hour chart RSI has rolled over from overbought levels in favor of correction.
The pair, therefore, risks falling toward 109.80. That would mark the completion of a head-and-shoulders (H&S) pattern on the hourly chart.
An hourly close below the neckline support at 109.80 would confirm an H&S breakdown and open the doors to 110.60 (target as per the measured move method).
On the higher side, the session high of 110.02 is the level to beat for the bulls. A sustained move higher could cause more buyers to join the market, yielding a re-tet of the Jan. 17 high of 110.29.
Hourly chart
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Trend: Bearish
Technical levels
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