**USD/JPY Exits the Range of Bearish Corrective Channel: Comprehensive Analysis**
*Based on the original analysis by Economies.com*
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#### Introduction
The USD/JPY currency pair has recently exhibited significant price movement, drawing the attention of traders and analysts alike. According to insights from Economies.com, the pair has exited the confines of its previous bearish corrective channel, signalling shifts in short-term and potentially long-term trends. This comprehensive analysis will delve into the technical and fundamental drivers behind this breakout, examine the market’s response, highlight key levels to watch, and provide an outlook for USD/JPY.
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#### Overview of Recent Price Action
– The USD/JPY pair has ended the prior session with noticeable strength above the resistance of its bearish correction channel.
– This technical development suggests that the recent bearish momentum might be losing dominance, opening the door for a fresh wave of bullish price activity.
##### What Does Exiting a Bearish Corrective Channel Mean?
– In technical analysis, a corrective channel confines price movement during retracements or periods of pullback.
– Breaking above the upper boundary of such a channel often signals a resumption of the main bullish trend or the beginning of a new upward impulse.
– For USD/JPY, this breakout is a key event, implying a potential shift in market sentiment and momentum.
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#### Technical Analysis
##### Chart Dynamics and Important Levels
– Following the breakout, the pair established itself firmly above the upper resistance of the downward-sloping channel.
– The move was accompanied by increased bullish candlesticks and higher trading volumes, reinforcing the legitimacy of the breakout.
– Key resistance and support levels are now coming into play for the upcoming sessions.
##### Key Technical Points:
– **Immediate Resistance Zone**:
– The next hurdle for the bulls is the resistance area near 147.50, which aligns with previous swing highs.
– A sustained break above this zone could attract further buyers and trigger a move towards higher targets.
– **Short-term Support**:
– Initial support comes in at the former channel resistance (now acting as support) around the 146.60 level.
– Additional support is anticipated at 146.00 and then at 145.35, which is a key pivot for trend confirmation.
– **Bullish Confirmation**:
– As long as the price remains above 146.60, the bullish scenario will stay intact.
– A failure to hold above this mark could see the pair retreat into the correction phase, with heightened risk of further downside toward 145.35.
##### Technical Indicators in Focus
– **Moving Averages**:
– The pair is now trading above major short-term moving averages (such as the 20-period and 50-period MAs on the 4-hour chart), bolstering near-term bullish sentiment.
– **Relative Strength Index (RSI)**:
– The RSI is rising but has not yet reached overbought territory, allowing for additional upside before the probability of mean reversion increases.
– **MACD (Moving Average Convergence Divergence)**:
– MACD lines are pointing up and the histogram is expanding in positive territory, offering further technical confirmation of bullish momentum.
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#### Fundamentals Supporting the Move
Any significant technical breakout must be considered in the context of underlying economic fundamentals. Major factors influencing USD/JPY currently include:
##### US Dollar Factors:
– Recent data out of the United States, particularly employment and inflation numbers, has reinforced expectations of steady monetary policy from the Federal Reserve.
– While rate hike expectations have diminished, the Fed’s cautious and data-dependent guidance continues to offer underlying support to the greenback.
##### Japanese Yen Factors:
– The Bank of Japan maintains its ultra-loose monetary policy stance, with no sign of imminent tightening.
– Weakness in Japanese economic data and persistent low inflation underscore the BOJ’s dovish bias, pressuring the yen.
##### Risk Sentiment:
– The global risk environment is currently mixed
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