**USD/JPY Weekly Technical Outlook – Extended Bullish Trend Faces Key Resistance**
*Original analysis by ActionForex.com*
The USD/JPY pair extended its bullish movement for the week, pushing higher and briefly reaching a fresh multi-decade high before retreating slightly towards the weekend. The pair continues to reflect a strong upward trend fueled by diverging monetary policy expectations between the U.S. Federal Reserve and the Bank of Japan (BoJ), as well as favorable risk sentiment and capital outflows from Japan in search of higher yields.
In the near term, however, technical indicators suggest that the bullish rally may be approaching a critical stage where exhaustion or correction may be due. Investors will want to watch key support and resistance levels closely to determine the market’s next direction.
This outlook provides a detailed analysis of USD/JPY’s recent performance, technical developments on the charts, and the likely scenarios for price action in the coming sessions.
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**Weekly Overview of USD/JPY Movement**
– USD/JPY opened the week continuing the strong upward drive from the prior weeks, eventually peaking near the 157.70 level by Friday.
– However, the pair encountered significant resistance near its multi-decade highs and saw a moderate retracement to close closer to the mid-157.00 levels.
– On a weekly basis, USD/JPY remains in a well-defined uptrend with significant buying pressure on dips.
– The bullish trend remains supported by fundamental drivers and technical breakouts over medium-term levels.
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**Key Technical Levels and Indicators**
1. **Immediate Resistance:**
– The recent high around 157.70 represents short-term resistance.
– A firm break above 157.70 would reassert the bullish momentum, potentially driving the pair towards the next psychological level at 160.00.
2. **Near-Term Support:**
– Minor support lies at 156.07, the low for this past week.
– Breaking this level could lead to a deeper pullback, possibly towards the 154.96 area—the 55-day Exponential Moving Average (EMA) on the daily chart.
3. **Primary Support Zone:**
– A more significant support range lies near 151.86, intersecting with the 38.2% Fibonacci retracement of the 140.24–157.70 advance.
– A decisive break below here would raise questions on the sustainability of the broader uptrend.
4. **Fibonacci Projections:**
– 61.8% Fibonacci projection of the 138.05 to 151.86 leg, extended from 140.24, projects a possible upside target near 161.84.
– This projection serves as a long-term bullish target if the pair clears immediate resistance and maintains bullish fundamentals.
5. **Long-Term Chart Perspective:**
– On the monthly chart, long-term structures point to further upside potential.
– The break above 151.94 (previous high from October 2022) confirms a resumption of the long-term bull run that began in 2021.
– However, historic resistance points around 160.00-161.00 could pose a psychological as well as structural barrier for bullish continuation.
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**Developing Price Structure on Daily Chart**
The daily chart illustrates a strong ascending trajectory, typified by steep rising support lines and moving averages in upward alignment.
– The pair continues to trade above key moving averages, signaling sustained bullish momentum.
– The 14-day Relative Strength Index (RSI) remains elevated but not yet in extreme overbought territory, implying further upside is possible before a correction.
– Price action remains well above the 55-day EMA and the daily Ichimoku cloud, reinforcing the positive trend bias.
However, traders should keep in mind that parabolic-style rallies are frequently subject to abrupt corrections. Therefore, the momentum must be managed cautiously, particularly when the resistance zone near long-term highs draws near.
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**Fundamental Drivers
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