© ActionForex.com — Analysis adapted and expanded from the original article by ActionForex.
USD/JPY Weekly Outlook – Extended Analysis
The USD/JPY currency pair exhibited a moderate pullback last week, yet its broader trajectory continues to suggest underlying bullish momentum. Despite the recent decline, the pair remains within the boundaries of a near-term consolidation phase. Technical indicators support the view that a retest of previous highs is still a probable scenario unless critical support levels are breached convincingly.
Short-Term Technical Overview
– USD/JPY experienced a mild pullback to 155.74 during the past week before rebounding to close above the 156.00 level.
– The near-term bias remains neutral as consolidation continues just below the minor resistance at 157.70.
– A decisive breach above 157.70 would indicate the end of the corrective pullback, reinforcing the bullish trend with a run toward the 160.20 resistance.
– On the flip side, if the price breaks below 155.74 support, it could trigger a short-term downside momentum.
– Sustained trading below this level could open the path toward the 55-day Exponential Moving Average (EMA), currently sitting near 154.20.
– A breach below the EMA would further suggest a deeper corrective phase, targeting the support around 151.85, which served as a strong base in earlier sessions.
From a technical perspective, as long as the USD/JPY pair holds above the 153.59 support zone, the medium-term bullish bias remains intact. However, a decisive breach below that level would indicate that a broader reversal is potentially in play.
Medium-Term Outlook
The broader price action from the March low at 146.47 to the recent peak at 160.20 marks the bullish trajectory that began earlier this year. This ongoing rally is tentatively seen as part of a broader long-term uptrend, which gained additional confirmation when the pair broke through the 150.00 psychological and structural barrier earlier this year.
Key Considerations:
– Resistance at 160.20, the recent multi-year high, remains the target to break for bulls.
– A strong breach above 160.20 would resume the long-term uptrend, with an eye toward further gains possibly extending to 163.80 or higher.
– Market participants should watch the 153.59 support level, which now gains significance as a near-term pivot. Clarity in directional bias may emerge only after this level is broken or defended convincingly.
– Any substantial downside correction below this point could shift the medium-term trajectory and may also revive long-absent risk-off flows in the yen.
Depth of Technical Indicators
To support the ongoing analysis, several key indicators are worth watching:
1. Moving Averages:
– The 55-day EMA at 154.20 serves as initial dynamic support, separating a technical correction from a trend reversal.
– The 200-day Simple Moving Average (SMA), currently near 149.60, represents the key long-term trendline. A break below this level would trigger a reevaluation of the long-term bullish outlook.
2. Relative Strength Index (RSI):
– The RSI remains neutral in the 50–60 zone, reflecting consolidation free from overbought or oversold extremes.
– A decisive RSI break above 70 would confirm bullish acceleration, while a dive below 45 might signal increased selling pressure.
3. MACD (Moving Average Convergence Divergence):
– The MACD histogram near the zero line continues to indicate a lack of clear momentum, in line with the pair’s current consolidative state.
– Watch for a bullish crossover to suggest momentum resumption toward recent highs.
Trendline and Chart Patterns
– The daily chart continues to show a strong horizontal base forming between 153.59 and 157.70. This trading range resembles a classic consolidation rectangle, often resolved in the direction of the prior trend, which in this case is up.
Explore this further here: USD/JPY trading.