USD/JPY Price Analysis: Double Top formation bolsters a bearish reversal, 128.00 eyed

• A formation of a Double Top chart pattern signals investors’ failure to renew highs.
• The 20- and 50-EMAs have turned flat that indicating a consolidation ahead.
• The RSI (14) has shifted into a 40.00-60.00 range, which signals exhaustion in the uptrend.

The USD/JPY pair witnessed a steep fall on Monday after the asset printed a new multi-year high of 131.35. There is a minute deviation between the fresh multi-year high and the previous high of 131.26, recorded in the last week of April. Therefore, the recent high could be tagged as a failed attempt to establish above the previous high.

The asset has displayed a Double Top chart formation on a four-hour scale, which signals a bearish reversal after the successful retest of the previous highs. The critical resistance is placed from April 28 high at 131.26.

It is worth noting that the 20- and 50-period Exponential Moving Averages (EMAs) at 130.42 and 129.94 respectively have turned flat, which signals exhaustion in the uptrend.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a consolidation range of 40.00-60.00 from a bullish range of 60.00-80.00, which indicates a volatility contraction.

The yen bulls could enjoy a quick ride if the asset drops below the 50-EMA at 129.94, which will send the asset towards Thursday’s low at 128.76. A breach of the latter will drag the asset towards the round level support at 128.00.

On the contrary, the greenback bulls could regain dominance if the asset oversteps the multi-year high at 131.35. This will send the pair towards the 15 April 2002 high at 132.38, followed by April’s high at 132.82.

USD/JPY four-hour chart