USD/JPY technical analysis: Falls back to 200-day MA, further losses likely

• USD/JPY is struggling to capitalize on Monday's bullish candlestick pattern.
• A break below the 200-day MA, currently at 111.55, looks likely, as the pair has dived out of a rising trendline.

USD/JPY created an inverted bullish hammer at the 200-day moving average (MA) line on Monday. So far, however, the follow-through has been anything but bullish, which takes the shine off the hammer candle.

As of writing, the spot is trading at the 200-day MA line of 111.55, having faced rejection at 111.69 earlier today.

A failure to capitalize on the inverted bullish hammer and the violation of the ascending trendline, as seen in the 8-hour chart below, indicates scope for a deeper drop below the 200-day MA of 111.55.

8-hour chart

As can be seen, the pair has dived out of the rising trendline, validating the bullish-to-bearish trend change first signaled by the bearish divergence of the RSI confirmed on April 24. As a result, a deeper drop toward 11.00 could unfold over the next 24 hours or so.

Daily chart

The above chart shows the pair is currently probing the 200-day MA of 111.55, having created a bullish inverted hammer on Monday. A close above 111.90 (high of the hammer candle) is needed to revive the bullish view.

Trend: Bearish

Pivot points