USD/JPY – Head and shoulders breakout?

Major correction on the cards?

The rally in USDJPY from early March to early May was huge, driven by a combination of a soaring greenback and a BoJ determined to support its yield curve control policy tool.

But the last couple of weeks have brought some relief in the pair, driven primarily by the dollar paring gains against the broader market.

And the pair may have just broken below an interesting technical support level that could signal a more significant correction.

A head and shoulders appears to have formed over the last month and the break of the neckline is potentially in progress.

This also comes immediately following the break of the 200/233-period SMA band on the 4-hour chart which did provide support for most of the last week before finally giving way.

If this breakout holds, it could potentially point to quite a significant correction based on the size of the head and shoulders formation and the projections that could indicate.

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