USD/JPY Price Analysis: Looks south with bear flag breakdown on 4H chart
- USD/JPY feels the pull of gravity as risk sentiment weakens on coronavirus concerns.
- Deeper losses look likely, as the 4-hour chart shows a bear flag breakdown.
The anti-risk Japanese yen is gaining ground on coronavirus-induced risk-off in stock markets and pushing USD/JPY lower.
At press time, the currency pair is trading largely unchanged on the day near 104.45, having put in a high of 104.56 early today. Technical charts suggest scope for deeper declines.
The pair fell by 0.4% on Tuesday, confirming a bear flag breakdown on the 4-hour chart. The pattern indicates a continuation of the sell-off from the Oct. 20 high of 105.75, possibly toward 104.00 (Sept. 21 low). A close above 105.00 is needed to invalidate the immediate bearish bias.
That looks unlikely as the bear flag breakdown is backed by a below-50 or bearish reading on the relative strength index. The 4-hour chart MACD is also producing deeper bars below the zero line, a sign of the strengthening of the downward momentum.
4-hour chart
Trend: Bearish