- USD/JPY is struggling to capitalize on Monday’s bullish candlestick pattern.
- A break below the 200-day MA, currently at 111.55, looks likely, as the pair has dived out of a rising trendline.
USD/JPY created an inverted bullish hammer at the 200-day moving average (MA) line on Monday. So far, however, the follow-through has been anything but bullish, which takes the shine off the hammer candle.
As of writing, the spot is trading at the 200-day MA line of 111.55, having faced rejection at 111.69 earlier today.
A failure to capitalize on the inverted bullish hammer and the violation of the ascending trendline, as seen in the 8-hour chart below, indicates scope for a deeper drop below the 200-day MA of 111.55.
8-hour chart
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As can be seen, the pair has dived out of the rising trendline, validating the bullish-to-bearish trend change first signaled by the bearish divergence of the RSI confirmed on April 24. As a result, a deeper drop toward 11.00 could unfold over the next 24 hours or so.
Daily chart
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The above chart shows the pair is currently probing the 200-day MA of 111.55, having created a bullish inverted hammer on Monday. A close above 111.90 (high of the hammer candle) is needed to revive the bullish view.
Trend: Bearish
Pivot points
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