Technical analysis
The USDJPY pair is starting to correct from oversold technical conditions, with the MACD and RSI indicator start to reset to the upside.
The four-hour time frame shows that an extremely large head and shoulders pattern is forming, with the neckline of the pattern found around the 109.20 level.
What the possible outcomes are
In our most likely scenario, the USDJPY pair will start to full towards the 107.50 price area as the bearish head and shoulders pattern plays out to the downside.
Alternatively, the USDJPY pair will stage one final corrective move higher towards its 200-period moving average on the four-hour time frame, around the 110.30 level.
Key levels
Support 109.20 107.50
Resistance 110.00 110.30
