USDJPY Continues Its Correction Phase Downward

USDJPY Analysis – The Market Continues Its Correction Phase Downward

USDJPY continues its correction phase downward after a long period of market rallying for months. Over an extended period, the market’s order flow has been bullish. The bearish movement in April and June ended at the 126.50 support level, and the bulls continued to drive the market upward, as evidenced by the Moving Averages (MA) Cross.

Market Major Levels

Resistance Levels: 137.100, 139.400
Support Levels: 131.500, 126.500

USDJPY Long-Term Trend: Bearish

The bulls stormed the market and quickly drove it upward due to the price reaction at the support level of 126.500. The bulls’ ferocity resulted in a break of the previous resistance level at 131.500. As the market continued to rise, the Relative Strength Index (RSI) indicator indicated that the market was overbought, implying that a correction or retracement downward was required.

The retracement caused by the Relative Strength Index (RSI) overbought signal drove the price lower until the support level of 131.50 was retested. After the support level of 131.50 was retested, the market’s reaction led it upward, but with little momentum. After entering the overbought region again, the market appears to be retracing downward across the Fibonacci retracements.

USDJPY Short-Term Trend: Bearish

A shift in market structure occurred in the four-hour timeframe, causing the market to form lower highs and lower lows. The market is expected to continue falling until the liquidity below the low above the support at 131.50 is depleted. The correction is not likely to breach the support level at 131.50, which corresponds to the Fibonacci retracement tool’s 61.8 percent retracement level.

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