USD/JPY technical analysis: Bears challenge 1-1/2-week old ascending trend-line support

  • The USD/JPY pair came under some renewed selling pressure on Tuesday and extended the previous session’s pullback from the 108.75-80 supply zone.
  • The downfall has now dragged the pair back towards a short-term ascending trend-line support extending from five-month lows touched early this month.

Meanwhile, the pair has been oscillating within a broader trading range over the past one week or so, forming a rectangular chart pattern. A rectangle is a continuation pattern that forms as a trading range during a pause in the trend – bearish in this case.

Moreover, technical indicators on the daily chart have managed to recover from the oversold territory and again started gaining negative traction on the 4-hourly chart, reinforcing the near-term bearish set-up and increasing prospects for an eventual breakdown.

However, traders are likely to wait for a sustained weakness below the 108.00 round figure mark before positioning for any further near-term depreciating move ahead of the next big event risk – the latest FOMC monetary policy update, scheduled to be announced on Wednesday.

USD/JPY 4-hourly chart


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