USD/JPY Daily Analysis
USD/JPY Daily Chart
From a daily perspective, the pair didn't surpass the previous day's high, signaling a consolidation phase at high levels. This lack of significant selling suggests a sideways trend as the market seeks the right timing for a potential breakout. A confirmed bearish candlestick pattern emerged after touching the +3σ level of the Bollinger Bands.
Today, starting below the +2σ Bollinger Band level and in light of yesterday's bearish candlestick, it appears that the 150.60 to 150.80 yen range could serve as a resistance zone. This slightly favors a "sideways to bearish" outlook, suggesting that a further price adjustment might be on the horizon. Consequently, there is a notable chance of the price dipping below the 10 EMA on the 4-hour chart, a situation that warrants caution.
USD/JPY 4-Hour Chart
On the 4-hour chart, the price is consolidating at high levels but is barely maintaining its stance above the 10 EMA. Influenced by the daily chart's bearish tone, the outlook here is also slightly bearish. A break below the 10 EMA, particularly around the 150.40 yen mark, could signal a potential slide towards the early 150s. Although the 10 EMA might offer some support, the bias leans more towards a "sideways to bearish" sentiment.
In the event of a decline, the 150.00 yen area and the middle Bollinger Band line around 149.95 yen are key potential support levels to watch.
However, any significant move below the 10 EMA would necessitate an expansion of the Bollinger Bands on the 60-minute chart, where the selling momentum from the Tokyo market will play a critical role.
USD/JPY 60-Minute Chart
The 60-minute chart presents a Bollinger Band squeeze, denoting a sideways price range with upper resistance at about 150.70 to 150.75 yen and lower support at roughly 150.40 to 150.35 yen.
Given the pattern of lower highs, the immediate forecast is "sideways to bearish." However, since there has been a higher breakout on larger timeframes and not much selling pressure, a significant drop seems unlikely unless there is intensified selling below 150.35 yen.
For the moment, it would be prudent to watch for bullish positions and consider a gradual drop towards 150.00 yen if Tokyo traders initiate a push below 150.35 yen.
Tokyo Session Strategy
Fundamentally, the market is adjusting sideways at high levels following yesterday's US CPI data. The market has pulled back from early rate cut expectations, showing a propensity for dollar buying. The US 10-year Treasury yield is holding steady around 4.2%, providing no clear impetus for dollar selling, thus yen selling and dollar buying remain dominant.
Today's USD/JPY forecast leans towards a "sideways to bearish" sentiment, as suggested by the daily chart. The 10 EMA on the 4-hour chart, ranging between 150.40 to 150.35 yen, is holding as a support line against declines. The 60-minute chart shows lower highs as of this morning, indicating a bearish slant and possibly tempting traders to consider short positions. However, the lower boundary of the 60-minute range at 150.35 yen may not be easily breached without a surge in selling pressure, which could cause hesitation among traders looking to go short.
Although there is an uptrend, one should exercise caution around the 150.60 to 150.70 yen resistance zone noted yesterday. If the pair breaks through this range, the next targets could be between 150.73 to 150.75 yen, with reaching the 151 yen mark being less likely during today's New York trading session.
While the higher timeframes suggest a bullish break is possible, the overall bias remains upward. This implies that after the current consolidation phase, an upward trend is more probable. Therefore, traders should account for the possibility of a sideways range and strategize accordingly.
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