FX.co ★ USD/JPY

I see that the first wave of decline on USD/JPY appears to have already completed, and now I am watching for a corrective movement that ideally should not exceed the previous high near 158.87. I believe a corrective rise toward the 158.40 area would be a technically healthy scenario before the pair resumes its downward movement. I observe on the hourly chart that the dynamic average price lines are still trending upward in a fairly stable chain, and I notice that the current price is still trading above the lower dynamic lines, which tells me that the market has not yet produced a clear signal for a decline. I also notice that most of the oscillators in the additional window have turned upward, which further supports the idea that the current local growth may continue for a while before any real reversal develops. I expect that by the end of the day the upward correction may start losing momentum, and I would prefer to see the market begin a new downward phase at the start of the next trading day. I am currently focusing on a potential downside target around 156.55, which I consider a realistic level if the bearish structure resumes. I also think that one of the risks for dollar bulls is that the market could gradually become accustomed to the Middle East conflict or that tensions might ease, and I believe that such a development could reduce demand for the dollar and lead to a broader correction in USD pairs.

I also recognize that USD/JPY does not depend only on the dollar because the yen itself has been weakening for a long time, and I understand that this structural weakness in the Japanese currency continues to support the broader uptrend. I observe that since the start of the week the pair opened with a small upward gap and then pulled back slightly, and I see that the price is now hovering close to the important support level near 158, which used to be last week’s high and now acts as a key technical level. I think that if the pair fails to break below 158, the market will likely continue trading in the direction of the prevailing trend with the potential to revisit the January highs and possibly approach the psychological 160 level. I also understand that if the price breaks below 158, then the situation could change and traders will begin questioning the strength of the uptrend. I personally consider selling only below the 156.50 area because that would confirm a more meaningful shift in momentum. I also noticed that the pair recently tested the strong pullback zone around 157.55, and I believe the sell positions taken there were technically justified, even though I admit that ignoring potential buy opportunities might have limited some profits. I still prefer focusing on downside opportunities because I feel that selling near strong resistance zones offers a more comfortable risk-to-reward structure in the current market environment.