USDJPY daily chart June 29

Bank of America Global Research discusses USD/JPY technical outlook and warns of a scope for a correction lower in July.

"A triangle breakout targeted 131.50 (reached), the trailing high from 2002 is in the 135s (reached), the interior trend line is approximately 140/141, the 38.2% head and shoulders target is 145.18, the peak in 1999 was in the 147s and an A=C target is 149.53. Even higher head and shoulders targets exist. MACD trend is accelerating to the upside. However, the monthly chart uptrend remains the most overbought ever, which is a technical risk," BofA notes.

Below we show USDJPY price / RSI / MACD bearish divergences, a narrowing and flattening cloud and a bearish MACD cross. Together they imply a correction/consolidation is coming due this summer, probably July. What if USDJPY corrects soon? Will the daily chart start to look more like a top? For now, we can only watch and see if these bearish divergences work and if price action develops a top pattern worthy enough to refute such a strong underlying bull uptrend," BofA adds.

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