FX.co ★ USD/JPY

I see a clear contradiction between the prevailing trend, the dominant sentiment, and my own trading priorities, and I acknowledge that this contradiction is exactly why USD/JPY remains such a difficult instrument for discretionary decision-making. I recognize that the broader narrative is undeniably bullish, reinforced by higher-timeframe structure, momentum indicators, and even the psychological backdrop of “higher and higher” expectations, yet I admit that I was still mentally anchored to the idea of selling USD/JPY earlier, regardless of whether that sell was executed or not. I note that now, with price pulling back on the H4 chart into a technically strong Fibonacci retracement zone around 157.78–157.34, logic and classical technical analysis would clearly justify looking for long opportunities, but I consciously choose not to prioritize that scenario. I admit that I still prefer selling, not because the chart demands it, but because my interpretation of market balance suggests that upside continuation at these levels carries asymmetric risk. I accept that if the selling scenario fails to materialize, my plan is simply to step aside rather than force a trade in a direction that does not align with my internal framework. I understand that many traders argue that in such strong trends it is inefficient to focus on M5 or M15 entries unless they are used purely to catch pullbacks in the dominant direction, but I emphasize that this methodology does not suit my personal approach. I observe that the bearish rebound from the resistance line of the ascending channel signals, in my view, a corrective phase aligned with the daily trend structure rather than a simple continuation leg. I believe that if bulls fail to maintain price acceptance above the 158.00 resistance area, the probability of a deeper correction increases significantly, especially under a false breakout narrative that could open the path toward the lower boundary of the trading range near 154.517, with a possible extension toward the channel’s lower trendline. I therefore find the idea of buying only after a confirmed consolidation below 158.00 more appealing, as it would validate a corrective structure rather than blind trend chasing.

I also factor in the fundamental reaction I observed, where the market responded more aggressively than expected to the Finance Minister’s verbal threats regarding potential currency intervention, even though I am aware that parallel political developments, including the Japanese Prime Minister’s readiness to call early elections and reshuffle the cabinet, may dilute the credibility of such threats. I still expect USD/JPY to gravitate back above the EMA20, which I currently see as resistance around 158.40, and I closely watch the ongoing attempt to reclaim that level. I anticipate that buying pressure would intensify if price regains the fast EMA8 near 158.70, yet I remain open to a deeper pullback toward the EMA50 around 157.70 as a technically healthy rebound zone. I maintain that the broader growth scenario remains intact, especially after observing how price respected the upward-sloping trendline following the breakout of the ascending channel, where the former upper boundary has now transformed into dynamic support reinforced by the psychologically significant 158.00 level. I acknowledge that from a pure technical standpoint, buying is currently the dominant priority and selling appears countertrend, but I also emphasize that the sharp corrective move itself strengthens the bullish case by offering discounted prices to committed buyers. I define the main bullish objective as a decisive breakout and consolidation above 158.90, which would confirm renewed upside momentum. I interpret the longer-term wave structure as still developing upward at the start of the new year, with MACD holding in the upper buy zone and above its signal line. I recall that repeated failures to break below the 154.37 support last December formed a double-bottom structure, which in my view laid the foundation for the current advance. I firmly believe that the market is targeting a renewal of the 2024 high near 162.14, visible clearly on the weekly chart, and I expect interim pauses driven by bearish divergence to act as traps for late sellers rather than genuine reversals. I conclude that until that higher target is reached, I personally see short-term buy trades as the only rational engagement, while recognizing that a temporary dip below the ascending trendline may occur first.