FX.co ★ USD/JPY

USD/JPY 4H Technical Analysis The previous analysis favored the continuation of the bullish structure as long as price respected the rising trendline and held above the BOS area, while I also mentioned that upside momentum could remain intact until price reached the major RESISTANCE. The current 4H chart shows that this scenario has almost completed as USD/JPY is now trading around 161.96 after extending steadily from the BOS+RBS ZONE near 160.60. Price has respected the ascending trendline throughout the recent rally, producing consecutive higher highs and higher lows, confirming that buyers have remained in control. However, I can now see that price has reached the marked RESISTANCE where BOS 4H is printed, and candles are beginning to compress instead of expanding aggressively. This usually reflects slowing bullish momentum even though no confirmed bearish reversal has appeared yet. Volume also does not show aggressive buying compared with the impulsive move from the BOS area, suggesting that buying pressure is gradually fading near resistance. I believe liquidity is now building above the current highs, making this area attractive before any meaningful reaction develops. If price manages to close decisively above 162.00 with sustained momentum, buyers could continue extending the move. Otherwise, repeated rejection around this resistance would increase the probability of profit-taking. The trend technically remains bullish because the ascending trendline is still valid, but I would avoid chasing fresh longs directly into resistance because the risk-to-reward has become less attractive compared with earlier entries from the BOS+RBS ZONE. I now expect the market to focus on the TL LIQ shown on the chart once the current resistance has been tested. My preferred expectation remains that price could briefly sweep liquidity above the current highs before reversing toward the marked BUYING ZONE. The projected path on the chart suggests a gradual decline toward the OB+FVG between approximately 160.20 and 160.41, where I would expect buyers to become active again if bullish market structure remains intact. This zone also aligns closely with the previous BOS area, making it a logical location for demand to re-enter the market. I would monitor price action carefully once it reaches this region because a strong bullish reaction could provide continuation toward fresh highs later. However, if sellers generate a decisive breakdown below the BUYING ZONE, then the current bullish structure would weaken significantly and a deeper correction could develop. From a fundamental perspective, traders will also remain sensitive to expectations surrounding BoJ policy normalization, Fed interest rate outlook, U.S. inflation data, Treasury yields, and broader geopolitical developments, as these factors continue influencing JPY and USD flows. Overall, I remain cautiously bullish in the bigger picture, but after such an extended rally into RESISTANCE, I believe a liquidity sweep followed by a retracement into the OB+FVG and BUYING ZONE remains the higher-probability scenario before the next sustainable bullish continuation.

USD/JPY on the 4H chart is showing a critical reaction after a sharp bearish rejection from the recent highs, indicating that the market is testing whether buyers can regain control from the highlighted BUYING ZONE. The rally above the marked RESISTANCE was followed by a strong rejection, creating a bearish MSS that interrupted the previous bullish structure. I can see that the decline respected the TL LIQ concept, where price swept liquidity before moving aggressively lower into the OB+FVG region. This area also aligns with the BOS+RBS ZONE, making it one of the strongest technical confluence levels on the chart. The current BUYING ZONE around 160.556 is positioned directly above the BSL, suggesting that liquidity resting below this level could still be targeted before any sustainable recovery begins. I believe the first reaction from this support may produce a short-term bounce because buyers often defend areas where multiple technical factors overlap. However, confirmation remains essential because the recent bearish momentum has been strong enough to keep sellers active. The projected path on the chart suggests that price may initially recover toward the previous intraday resistance before pulling back once again to retest the demand area. If that retest holds with bullish rejection candles, it would strengthen the probability of another impulsive move to the upside. The increase in selling volume during the decline also reflects that market participants have become more active around this level, making the next few candles particularly important for confirming whether institutional buying is returning or whether sellers continue dominating the short-term trend.

Looking ahead, my attention remains focused on how price behaves around the OB+FVG and BUYING ZONE because this region is likely to determine the next directional move. I think a successful defense of 160.556 would allow buyers to rebuild momentum and gradually challenge the previous RESISTANCE before attempting another move toward the recent swing highs near the 162.50 area. The bullish projection drawn on the chart reflects this possibility, showing an initial recovery followed by a healthy pullback that respects support before continuing higher. Such a sequence would maintain the broader bullish market structure despite the recent bearish correction. On the other hand, if price breaks decisively below the BUYING ZONE and closes beneath the BSL with strong bearish candles, the current support would be invalidated and sellers could extend the decline toward lower liquidity levels. I will therefore avoid assuming that the first bounce guarantees a reversal, as I prefer waiting for confirmation through higher lows and a fresh bullish BOS before increasing confidence in the upside scenario. Traders should also remain aware of upcoming economic releases from both the United States and Japan, including inflation data, employment figures, and central bank commentary, because these events can rapidly increase volatility in USD/JPY. In addition, changes in global risk sentiment and political developments can influence demand for the Japanese yen as a safe-haven currency. For now, the chart continues to suggest that the highlighted demand area offers buyers an opportunity to respond, but only a confirmed bullish reaction from this confluence zone will validate the projected recovery path shown on the chart.