USD/JPY Price Analysis: Bears to outshine on balance below 127.00, a death cross looks likely

• A formation of a Falling Channel is advocating the yen bulls.
• Investors should brace for a death cross formation, which will strengthen yen further.
• The RSI (14) is expected to weaken the greenback after a prompt action below 40.00.

The USD/JPY pair is attempting to rebound after a minor correction from 127.40 in early Tokyo. A rangebound move has been observed this week as the asset has remained in a bracket of 126.36-127.48. The volatility has been contracted sharply investors are bracing for wild moves going forward.

A Falling Channel chart formation on a four-hour scale is advocating the dominance of the yen bulls in the upcoming trading sessions. The upper boundary of the Rising Channel is placed from May 11 high at 130.81 while the lower boundary is plotted from May 4 low at 128.63. The asset is displaying back and forth moves in a 126.36-127.48 range near its crucial support at 126.97.

The 50- and 200-period Exponential Moving Averages (EMAs) are expected to display the death cross formation, which will strengthen the Japanese yen against the greenback further.

Meanwhile, the Relative Strength Index (RSI) is oscillating in a 40.00-60.00 range, which signals topsy-turvy moves in the asset. A decisive slippage below 40.00 will bring a prompt downside action into the asset.

Investors should tighten their shorts if the asset drops below Tuesday’s low at 126.36, which will drag the asset towards March 28 high at 125.10, followed by April 1 high at 123.04.

On the flip side, the greenback bulls could take the charge if the asset oversteps May 19 high at 128.95, which will drive the asset towards May 17 high at 129.78. A breach of the latter will expose the asset to recapture its multi-year high at 131.28.

USD/JPY four-hour chart