Title: Strategic USD/JPY Sell Plan: Key Technical Setups and Market Guidance
By: Pablo Piovano, FXStreet Analyst
Original article: https://www.fxstreet.com/analysis/usd-jpy-strategic-sell-idea-video-202510280859
Overview
The currency pair USD/JPY has recently shown signs of reaching a potential exhaustion point after an extended bullish rally. Forex strategist Pablo Piovano outlines a strategic sell idea based on both technical and fundamental analysis. This article expands on his insights by providing a comprehensive breakdown of market indicators, chart patterns, macroeconomic catalysts, and risk considerations for shorting the USD/JPY pair.
Market Context
According to recent trading data, USD/JPY has reached significant technical resistance around the 150.00 level. Historically speaking, this price area has acted as a psychologically important barrier, in part due to the potential for intervention by Japanese monetary authorities when the yen becomes too weak against the US dollar.
Several contributing factors are supporting the idea of a near-term pullback in USD/JPY:
– A long-lasting bullish trend appears to be facing exhaustion.
– Bearish divergence has formed on key momentum indicators such as the Relative Strength Index (RSI).
– US yields may have peaked in the short term, reducing demand for the dollar.
– Japan’s Ministry of Finance (MoF) continues to vigilantly monitor the exchange rate and could intervene to strengthen the yen.
Technical Analysis: Identifying a Selling Opportunity
The technical landscape reinforces the case for a sell strategy in USD/JPY. Several elements are converging to suggest a turning point:
Support and Resistance Zones
– Resistance Level: The 150.00 zone has served as strong resistance, with multiple rejection points suggesting seller dominance.
– Support Zone: Immediate support lies at the 149.00 handle, followed by more meaningful levels at 147.80 and 146.50.
Bearish Indicators
– RSI Divergence: Despite higher highs in price, the RSI has failed to follow suit, forming a bearish divergence that commonly precedes a price reversal.
– MACD Weakness: The Moving Average Convergence Divergence histogram has flattened, suggesting fading bullish momentum.
– Price Exhaustion: Candlestick formations near 150.00 indicate indecision and potential for reversal, such as the appearance of spinning tops and doji patterns.
Chart Structure
– Ascending channel support is beginning to erode.
– A clean break and daily close below the 149.00 mark would indicate a shift in market control from buyers to sellers.
– Formation of a potential double top pattern near 150.00, which has negative implications if the neckline (around 149.00) is broken.
Trade Setup: Short Entry Plan
Based on the described technical conditions, Pablo Piovano proposes a strategic short entry. The trade setup is structured as follows:
Entry:
– Initiate short positions in the 149.70 to 150.00 range, depending on intraday rejection signals (e.g., pin bars, bearish engulfing candles).
– Confirm entries on lower timeframes, such as H1 or H4 charts, using key technical indicators.
Stop Loss:
– Place stop loss above recent swing highs, ideally just above 150.30.
– Consider volatility-based stop placement using indicators like Average True Range (ATR) to avoid being stopped out prematurely.
Target Levels:
– First target at 149.00 for partial take-profit.
– Second target near 147.80, correlating with previous breakout levels and horizontal support.
– Third target around 146.50 as an extended objective if momentum accelerates further in favor of the yen.
Risk-Reward Ratio:
– Maintain a minimum risk-reward ratio of 1:2 to ensure strategic position sizing.
– Adjust positions dynamically based on price action and upcoming economic releases.
Macro Drivers: Fundamental Factors Supporting Yen Strength
While technicals provide justification for a tactical short, macroeconomic conditions can further support the
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