FX.co ★ USD/JPY

USD/JPY Technical Outlook: Bullish Momentum Faces Resistance at 147.00 The USD/JPY pair has been riding a wave of bullish momentum, recently touching the 147.02 mark with a modest intraday gain of +0.26%. This move reflects continued strength in the U.S. dollar, supported by hawkish Fed sentiment and resilient U.S. economic data. However, the pair now faces a critical technical juncture as it approaches a well defined resistance zone. Key Levels to Watch: Resistance: 147.00 - 147.20 zone has acted as a ceiling multiple times in August. A clean break above could open the door toward 148.50 and potentially 150.00. Support: 146.00 remains a pivotal level. A drop below this could trigger a correction toward 144.80 and 143.50. Candlestick Structure: Recent candles show strong bullish bodies with minimal upper wicks, indicating buyers are in control. However, the proximity to resistance suggests caution is warranted. A bearish engulfing or shooting star near 147.20 would signal exhaustion. RSI Analysis: The RSI (14) and RSI (7) are hovering near the 70 threshold, signaling overbought conditions. Historically, USD/JPY has pulled back when RSI breaches this level. Traders should watch for divergence or a breakdown below 60 as early signs of reversal. Trading Strategy: Bullish Bias: If price consolidates above 147.20 with RSI stabilizing, consider long positions targeting 148.50 with a stop below 146.50. Bearish Setup: A rejection at 147.20 with RSI divergence could justify short positions targeting 145.00, especially if volume confirms selling pressure. Alternative Angle: For algo traders or coders, consider scripting a dual-RSI crossover strategy using 7-period and 14-period RSI. A bullish signal triggers when RSI(7) crosses above RSI(14) below 60, while a bearish signal triggers when RSI(7) crosses below RSI(14) above 70. This can help automate entries around momentum shifts. Final Thoughts: USD/JPY is at a crossroads. While the trend favors bulls, the resistance near 147.00 is no pushover. Traders should stay nimble, monitor RSI behavior closely, and be ready to pivot if price action confirms a reversal. As always, risk management is key especially in volatile FX environments like this.