- USD/JPY picks up bids to extend the week-start rebound from the lowest levels since May 2022.
- Upbeat RSI backs confirmation of bullish chart pattern to tease buyers.
- 200-HMA acts as final defense of buyers, 50-HMA guards immediate downside.
USD/JPY refreshes intraday high around 129.15 as it pierces the neckline of a two-day-old inverse head-and-shoulders (H&S) bullish chart pattern during early Tuesday, retreating to 129.00 by the press time.
Not only the inverse H&S confirmation but the upbeat RSI (14), not overbought, also adds strength to the USD/JPY rebound from the lowest levels since late May 2022.
As a result, the Yen pair buyers are well-set to approach the 130.00 round figure before aiming for the theoretical target surrounding 130.40.
It’s worth observing that the RSI line is approaching the overbought territory and may probe the USD/JPY bulls around 130.40, if not then the 200-HMA level surrounding 131.25 will be in focus. Additionally, the 131.00 round figure could act as an extra filter towards the north.
On the flip side, the resistance-turned-support line of the stated inverse H&S, around 128.75 by the press time, restricts the immediate downside of the USD/JPY pair ahead of the 50-HMA level near 128.30.
In a case where the Yen pair remains bearish past 128.30, the monthly low around 127.20 and May 2022 low near 126.35 will gain the market’s attention.
Overall, USD/JPY is likely to witness further recovery but the upside room appears limited.
USD/JPY: Hourly chart
Trend: Further recovery expected