USD/JPY Price Analysis: Double Top Formation Supports Bearish Reversal, 128.00 Targeted

After reaching a fresh multi-year high of 131.35 on Monday, the USD/JPY pair experienced a sharp decline. The difference between the new multiyear high and the previous high of 131.26, reached in the last week of April, is negligible. Therefore, the recent high may be categorized as an unsuccessful attempt to establish above the previous high.

The asset produced a Double Top pattern on a four-hour time frame, indicating a bearish reversal after the successful retesting of the prior highs. The key resistance is established by the high of April 28 at 131.26.

Notable is the flattening of the 20-period and 50-period Exponential Moving Averages (EMAs) at 130.42 and 129.94 respectively, which indicates weariness in the uptrend.

Meanwhile, the Relative Strength Index (14) has switched from a bullish range of 60.00-80.00 to a consolidation range of 40.00-60.00, indicating a contraction in volatility.

The yen bulls could enjoy a brief ride if the asset falls below the 50-EMA at 129.94, which would take the currency towards Thursday's low at 128.76. A break of the latter will bring the asset to the round level support at 128.00.

In contrast, the dollar bulls could regain control if the asset surpasses the multi-year high at 131.35. This will take the pair toward the 15 April 2002 high of 132.38, followed by April's high of 132.82.

USD/JPY