USDJPY Becomes Overbought after Bullish Breakout

Market Analysis – October 17

USDJPY took off from a major support level in April, initiating a strong upward rally along a bullish trendline that fueled a decisive breakout above the resistance zone at 151.0210. However, after this impulsive bullish breakout, the pair has begun to correct as momentum cools off.

USDJPY Key Levels

Demand Levels: 151.0211, 140.2110
Supply Levels: 158.0230, 161.5380

USDJPY Long-Term Trend: Bullish

In April, USDJPY tested the 140.1630 support level—a zone where the market had previously reversed in both January and September 2024. This latest reversal pattern has now evolved into a massive triple bottom, which becomes even clearer on higher timeframes above the daily chart.

The price climbed steadily from the 140.1640 support level but initially faced resistance at 151.0211. After a brief pullback to the bullish trendline, buyers regained control, propelling the price higher. Just before the breakout, a noticeable surge in bullish momentum appeared. Tevidenced by a gap-up in price action—signaling growing market optimism and strong institutional activity.

USDJPY Short-Term Trend: Bearish

Currently, the Smoothed Heikin Ashi candles indicate a developing decline, with the red-toned candles appearing above the custom candles. This configuration indicates a short-term bearish retracement within the broader bullish structure. The ongoing correction follows the recent surge. As the price approaches the open gap, traders can capitalize on potential trading opportunities using gap-entry strategies to generate precise forex signals.

Overall, while the long-term outlook for USDJPY remains strongly bullish, the short-term pullback suggests a cooling phase that could offer fresh entry points before another potential upward continuation.

Make money without lifting your fingers: Start using a world-class auto trading solution.