FxWirePro: Inverted 'Head and Shoulders' pattern and bearish divergence raises scope for downside in USD/JPY

• USD/JPY is trading a narrow range in the Asian session, remains capped below 5-DMA.
   
• US dollar dented over rising speculation on the appointment of less hawkish Federal Reserve Governor Jerome Powell.
   
• Japan retail sales rise for 11th straight month in September, up 0.8 percent m/m and 2.2 percent y/y (forecast of 2.5 percent).
   
• Technically the pair struggling at major trendline resistance at 114.55, slips below 5-DMA.
   
• We see and inverted Head and Shoulders formation and bearish divergence on Stochastics which raises scope for downside.
   
• RSI and Stochs have rolled over from overbought levels and biased lower.
   
• 1H 200-SMA at 113.45 is strong support, we see weakness on break below.

Support levels - 113.45 (1H 200-SMA), 112.91 (20-DMA), 112.76 (23.6% Fib retrace of 107.31 to 114.45 rally)

Resistance levels - 113.76 (5-DMA), 114, 114.45 (Oct 27 high)

Recommendation: Good to go short on break below 113.45, SL: 114, TP: 113/ 112.75/ 112.

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