- The path of least resistance for USD / JPY looks to the downside.
- A possible death crossover on the 1 hour chart indicates the risk of further falls.
- A small bounce to the 21-hour SMA cannot be ruled out, as the RSI recovers.
The USD / JPY pair remains just below the 104.00 level at the start of the European session on Monday, mainly affected by the persistent weakness of the US dollar amid expectations of an economic recovery.
Also, upbeat industrial production data and retail sales from Japan in October encourage the JPY bulls, which weighed further on the pair. Meanwhile, the decline in S&P 500 futures also contributes to the decline in USD / JPY.
From a short-term technical perspective, the pair has traded within a falling wedge on the 1-hour chart for the past week.
The price is looking for a bearish breakout. The pattern is likely to confirm on an hourly close below the downtrend line support, now at 103.82.
However, a minor bounce is not ruled out as the RSI has bounced off lows and is heading towards the midline.
The bearish 21-hour moving average at 104.01 could challenge the recovery attempt. Above that level the critical barrier at 104.10 could be tested.
It is worth noting that a death crossover pattern could be created, as the 50 hour SMA is pointing towards the 200 hour SMA, looking to cut below it.
Therefore, the decline looks more compelling in the short term.
USD / JPY 1 hour chart
USD / JPY technical levels
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