USDJPY Maintains Its Upward Market Trend

USDJPY Analysis – August 18

USDJPY maintains its upward market trend. For a very long time, the USDJPY has been on an uptrend. 125.10 was a strong resistance level until it was broken in April of 2022. After this barrier was breached, the bulls continued to drive the market until it hit the prior resistance at 130.30.

USDJPY Significant Zones

Supply Zones: 139.40, 146.80
Demand Zones: 130.30, 125.10

Long-term Trend: Bullish

The bulls took a partial profit at the previous resistance of 130.30 as the market retraced lower and subsequently found a re-entry after drawing out liquidity below a local low on the daily timeframe. The prior barrier of 130.30 was broken as the bulls re-entered the market, and prices continued to rise into an overbought position, as shown by the Relative Strength Index (RSI). As the market approached overbought territory, prices made greater highs while the RSI made lower highs, signalling a bearish divergence. Following the bearish divergence signal, the bears attacked the market, dumping it into the demand zone around 130.30.

After the level at 130.30 was breached, the market only rebounded higher for three days before losing momentum as the bulls fought to maintain the upswing. The bulls were able to force the market into the supply zone at 139.40 over the next few days, albeit slowly, and the bears seized the market. The Simple Moving Average (SMA) validated the trend shift on the daily timeframe. Early this month, the market reached the demand zone around 130.30, causing rejection and increasing the likelihood of a resumption of the market’s uptrend.

Short-term Trend: Bearish

Following the rejection at the daily order block at 130.30, the four-hour timeframe seems bullish. To allow for additional momentum when the market rallies upward, the market is projected to sink downward and draw liquidity below the immediate swing low just above the 130.30 level.

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