- USD/JPY pares all the previous day’s gain on Thursday.
- More downside for the pair on the cards, if price breaches the Head & Shoulder formation neckline.
- Momentum Oscillators warn caution for any aggressive directional bets.
USD/JPY remains under pressure in the European trading hours. The pair hinges near the daily support level of around 109.70.
At the time of writing, USD/JPY is trading at 109.77, down 0.14% so far.
USD/JPY daily chart
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On the daily chart, the USD/JPY pair has formed Head& Shoulder (H&S) formation, which is a bearish reversal technical pattern.
If USD/JPY breaks the neckline of the mentioned technical pattern, it would result accelerate the selling toward the 109.50 horizontal support level.
The Moving Average Convergence Divergence (MACD) indicator trades just below the trendline with a neutral stance. Any downtick in the MACD would bring the low of July 20 at 109.32 back into action.
Next, the USD/JPY bears would effort to capture the 109.00 horizontal support level.
Alternatively, If price sustained the neckline of the H&S formation, it could crawl back to the 110.00 horizontal resistance level followed by the 110.40 horizontal resistance level.
The USD/JPY pair will make the next move toward July 26 high in the vicinity of the 110.60 area.