USDJPY Pulls Back for Support

Market Analysis – January 2

USDJPY has demonstrated a robust bullish trend over the past year, marked by two distinct phases of upward momentum. The first phase dominated the first six months of 2024. After a two-month corrective downtrend, the pair resumed its bullish trajectory. The second phase featured a deep retracement that offered buyers opportunities to reenter the market.

USDJPY Key Levels

Demand Levels: 150.00, 146.50, 140.20
Supply Levels: 156.10, 160.30, 163.40

USDJPY Long-term Trend: Bullish

The second phase of USDJPY’s bullish trend began with a failed low at the demand level of 140.20, signalling strong buying interest. This shift in sentiment was confirmed by the crossover of the 9-period and 21-period Moving Averages, which pointed to a clear change in market direction.

However, the pair encountered significant resistance at 156.10, where a head-and-shoulders pattern formed. This bearish reversal pattern triggered a decline toward 150.00, a psychological level that acted as a solid support zone. Buyers stepped in at this key level, leading to a price displacement that pushed the market above the 156.10 resistance level, reestablishing the bullish structure.

USDJPY Short-term Trend: Bullish

Following the bullish breakout above 156.10, USDJPY pulled back to retest this critical level. The retest serves as a potential support zone, setting the stage for a rally toward the next resistance at 160.30.

This pullback presents an attractive opportunity for traders to align with the prevailing bullish trend. Price action around the 156.10 level could guide entries, particularly for those aiming to capitalize on high-probability setups. Forex signals channels often focus on such scenarios to ensure accuracy and optimize returns.

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