I am analyzing the USD/JPY currency pair as it continues to move within a developing correction while remaining firmly inside a broader bullish channel, and I see clear signs that the dominant trend is still upward. I note that the moving averages are aligned in favor of buyers, which I interpret as confirmation of a short-term bullish trend. I observe that the price has broken above the signal line area, and I consider this a strong indication of sustained buying pressure. I expect that from current levels the market may attempt a moderate bearish correction, and I am specifically watching the support zone near 154.35 as a potential test area. I believe that a successful defense of this support could lead to a renewed upward impulse, with price action targeting levels above 158.85. I clearly see that a decline and firm breakout below 152.35 would invalidate this bullish scenario, and I would then reassess the market as entering a deeper bearish phase. I would interpret such a move as a decisive break of support, opening the way toward a decline below 149.35. I am also paying close attention to resistance near 157.05, because I believe a breakout and consolidation above this level would confirm a breakout of the upper boundary of the descending correction channel. I expect buyers to remain active as long as price holds above key structural supports, and I maintain a bullish bias unless invalidation levels are triggered.
I am particularly encouraged by today’s market behavior, as I saw buyers deliver a strong and convincing response on the USD/JPY chart. I observed a large bullish candlestick on the daily timeframe, and I interpret this as a clear return to the previously dominant ascending channel. I note that this move renewed the December highs and revived expectations for a potential retest of the 2025 high near 157.892. I do not rule out the possibility that this level could be challenged before the beginning of January. I am currently focused on the psychological round level of 158.00, which I see as the next important target for buyers. I interpret the market’s reaction to the Bank of Japan’s rate decision as evidence that investors were prepared for this outcome. I see the yen’s selloff as confirmation that traders found no signs of a more aggressive policy stance from the regulator. I believe this dynamic may continue to pressure the yen in the short term, although I remain aware that longer-term direction will depend on future BoJ actions and global macro conditions. I am not convinced that news is the primary driver at this stage, especially given the proximity to the Christmas holidays. I suspect that large market participants could still push prices sharply higher if liquidity allows, and I even consider scenarios involving a rapid upside gap toward 159. I am encouraged by the four-hour chart, where I see all major components pointing upward and price holding above the historical level of 156.79. I conclude that sustained trading above 157.87 could trigger stops and pending orders, reinforcing the bullish continuation narrative.
