USDJPY Has Formed an Inverted Head and Shoulder Reversal Pattern

Azeez Mustapha
19 August 2021 | Updated: 19 August 2021

USDJPY Price Analysis – August 19

USDJPY has formed an inverted head and shoulder reversal pattern to shoot price up. The market has generally been in an uptrend and is sliding along an ascending channel. Bears have, however, stepped in to exploit points of weakness to drive the market down a falling wedge formation. The 108.900 key level, however, has been playing a critical role in keeping the sellers at bay.


USDJPY Key Level

Resistance Levels: 109.770, 110.800, 111.650
Support Levels: 108.900, 108.600, 107.840

USDJPY Has Formed USDJPY Long Term Trend: Bullish

On the 2nd of July 2021, bears exploited the inability of USDJPY to climb to the upper half of the ascending channel. Price was knocked down at the halfway line and sellers took the opportunity to drive it further down. The market tried to recover by bouncing off the lower border of the channel, but its recovery was cut short. Price has now plummeted down and out of the channel with momentum.

It took the 108.900 major support zone to bring an end to the fall of the market. The support level also helped to thrust the market direction back upwards and out of the falling wedge pattern. USDJPY, however, met a brutal resistance at 110.800, which repelled price with great intensity. The market has now dropped to test the upper border of the falling wedge, which in turn has propelled the price up. The movement of the market has formed an inverted head and shoulder reversal pattern, which is to drive price up.

USDJPY Has Formed USDJPY Short Term Trend: Bullish

The market has now formed into an inverted head and shoulders pattern which is pushing USDJPY back into the ascending channel. But against the run of things, the market has failed woefully at the lower border of the channel, which has sunk price to around the 109.530 price level. This has made the 4-hour candle spike to the underside of the EMA period 14 (Exponential Moving Average). Also, the RSI (Relative Strength Index) indicator has fallen steeply from 62 to 44.

This shows that there may be a sudden alteration in the market by the bears. If this continues, the price will fall again to confront the 108.900 support. It is, however, expected that the market will correct this anomaly to adjust to the inverted head and shoulder pattern, which should move the price up further, first to 111.650, then to 113.000.

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Azeez Mustapha

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.