FX.co ★ USD/JPY

The USD/JPY H4 chart is trading around 157.53 after an aggressive bearish expansion that completely changed the short-term market structure. From my perspective, the chart clearly reflects institutional selling pressure rather than ordinary profit-taking. Price swept the previous Buy Side Liquidity (BSL) resting above the recent highs before reversing sharply, a classic liquidity-engineering move frequently seen in Smart Money Concepts. After that sweep, the market delivered a decisive Market Structure Shift (MSS) followed by a strong Break of Structure (BoS) to the downside, confirming that sellers had gained control. The large impulsive bearish candles created significant displacement, leaving behind an unmitigated Fair Value Gap (FVG) that may later act as a magnet if price attempts a corrective rally. The previous bullish Order Block failed to hold, showing that institutional demand was absorbed before the market continued lower. I also notice that volume expanded during the decline, suggesting participation from larger market players instead of retail-driven selling. The RSI has dropped near the oversold region around 26, but oversold conditions alone are not enough to call a reversal because strong trends can remain oversold for extended periods. I would rather wait for confirmation than simply buy because RSI is low. The recent impulsive decline also left a visible imbalance between buyers and sellers, indicating that the market may first retrace into premium pricing before searching for additional downside liquidity. The current move appears to be targeting Sell Side Liquidity (SSL) resting beneath recent swing lows, and until that objective is satisfied, bearish momentum remains technically valid. I also observe that the former ascending Trend Line Liquidity (TLL) has already been violated, further confirming that buyers lost control after failing to defend higher lows. The bearish expansion resembles a liquidity run that invalidated previous bullish expectations. If price produces a retracement into the bearish Order Block aligned with the FVG, I would consider that area a potential continuation zone rather than immediately expecting a complete trend reversal. Immediate resistance can be monitored around 158.20–158.60, followed by 159.20, where sellers may become active again. On the downside, I will closely monitor 157.00, then 156.40, and finally 155.80 as the next liquidity objectives if bearish pressure continues. Only a sustained recovery above 159.20 would begin weakening the present bearish narrative.

Looking further ahead, I believe traders should pay close attention to how price behaves around the current demand reaction because this area may determine whether the recent sell-off becomes a temporary correction or develops into a much larger bearish trend. If buyers defend this zone and create strong bullish displacement accompanied by increasing volume, the market could revisit the previously formed imbalance and gradually recover toward 158.80, 159.50, and potentially 160.40. Such a move would represent a healthy mitigation phase rather than immediate bullish dominance because institutional traders often revisit inefficient price delivery before continuing in the prevailing direction. However, if candles continue closing below 157.50 with strong bearish momentum, it would indicate that sellers remain firmly in control and that lower liquidity pools are still the preferred destination. I would avoid entering aggressively against the trend until I see confirmation through higher lows, bullish displacement, and acceptance above nearby resistance. Another factor supporting caution is the psychological impact of the recent impulsive decline, which often attracts late sellers while professional traders patiently wait for retracements into premium zones. The current chart also illustrates efficient price delivery after the structure break, reducing the probability of an immediate V-shaped recovery. Instead, consolidation followed by another bearish expansion would fit the existing technical picture. If price manages to reclaim 158.60 and later closes above 159.20, the probability of extending toward 160.00–160.40 increases considerably, while a stronger breakout could even challenge 161.20 over the medium term. Conversely, failure to hold above 157.00 would expose 156.40, followed by 155.80, with an extended bearish objective near 155.00 if downside momentum accelerates. From my viewpoint, patience remains the strongest trading advantage here because the chart has already revealed institutional intent through liquidity collection, structural failure, displacement, imbalance creation, and momentum confirmation. I prefer allowing price to return into higher-probability execution areas instead of chasing candles after a large impulsive move. Overall, the H4 outlook continues to favor sellers unless buyers reclaim key resistance with convincing strength, making the bearish continuation scenario slightly more probable while still respecting the possibility of a corrective rebound before the next directional expansion.