- USD/JPY forms a bearish candlestick pattern at the multi-year highs.
- A bearish close on Friday would enhance the possibilities of a pullback.
- The BoJ has historically intervened to strengthen JPY in the 151.000s, indicating more downside pressure likely.
USD/JPY has formed a bearish Hanging Man Japanese candlestick pattern (circled) at key chart highs in the 151.000s on Friday, suggesting a heightened risk of a short-term reversal and pullback.
US Dollar versus Japanese Yen: Daily chart
The combination of the fact that the pair has tested the level of the 2023 high and formed the bearish pattern increases the possibility of a decline following on.
If Friday ends as a bearish red candlestick this will add confirmation to the Hanging Man formed on Thursday, and further increase the odds of more downside.
Japanese candlesticks are only short-term reversal patterns, however, so the move lower may be short-lived.
The fact that the 151.000s represents a zone in which the Bank of Japan (BoJ) has been known to intervene to strengthen the Yen in the past, further increases the chances of imminent weakness for the pair.
A pullback might be expected to go as low as support at the 50-day Simple Moving Average (SMA) situated at 149.009.
Alternatively, a recovery and clear break above 152.000 would suggest bulls continue to have the upper hand and the BoJ is reluctant or unable to intervene sufficiently to move the exchange rate.
Such a move, however, would be unlikely to rise much higher given the forces pitched against it, with a possible target at the next whole number of 153.000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
