USDJPY Breaks Through the Consolidation Zone to the Downside

USDJPY Price Analysis – September 16

USDJPY breaks to the downside of its range. This consolidation phase, which has lasted for the past 23 trading days, comes after the market has arrested its price decline but has been unable to re-launch itself back into its uptrend movement. The consolidation phase, therefore, is an outcome of the continuous tussle for dominance between buyers and sellers.

USDJPY Crucial Levels

Resistance Levels: 110.430, 110.800, 111.650
Support Levels: 109.570, 108.900, 108.600

USDJPY Long Term Trend: Bullish

USDJPY broke its bearish trend when it landed on the 108.900 key level on the 4th of August 2021. The bounce off the key level helps it break out of its descending triangle pattern and power its way upwards. However, an impressive rally was ended abruptly at the 110.800 resistance level. Afterward, price dropped, and though it bounced off the upper border of the descending triangle, it couldn’t hit the height where it had fallen again. Instead, the market started consolidating.

The market was therefore confined between the 110.430 and the 109.570 key levels. However, on the 15th of September, price breaks to the downside of the consolidation zone to kick-start a reaction in the market. The MACD (Moving Average Convergence Divergence) now shows a golden cross of its line to the downside of the zero level. While this shows a definite bearish movement in the market, the 108.900 support level lies in wait below to once again repel price upward.

USDJPY Short Term Trend: Bullish

On the 4-hour chart, the market retested the 109.570 key level before plunging downward. The market is currently trading around 109.391 and it is having difficulties dropping lower beyond this level. The MA period 20 (Moving Average) is leaning now downwards to support the market’s plunge. Meanwhile, the MACD is showing signs that the bearish trend might be over. Its lines, though still below the zero level, are coming together to cross each other upward. The bearish histogram bars are also reducing in size.

If the price pushes back up, it means that the break out was false and the market will return to range movement.

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