USDJPY Retracement Threatens Downtrend

Market Analysis – May 11

The USDJPY pair has initiated a retracement after testing the key demand level at 140.280. The pullback has developed a structured market pattern of higher highs and lows, potentially challenging the prevailing bearish trend.

USDJPY Key Levels

Demand Zones: 139.650, 137.210, 130.430
Supply Zones: 151.030, 157.390, 161.530

USDJPY Long-Term Trend: Bearish

USDJPY began the year with a bearish reversal after becoming overbought near the critical resistance at 154.400. The Smoothed Heikin-Ashi indicator candles have predominantly reflected downward momentum, confirming the bearish bias.

A brief stop-run at the key level of 151.030 temporarily shifted the Heikin-Ashi candles green, but the downtrend resumed, driving price toward the demand zone at 140.280, where the Stochastic oscillator signalled oversold conditions.

USDJPY Short-Term Trend: Bearish

Following the decline to 140.280, a bullish retracement has emerged, establishing a strong upward structure on lower timeframes. However, price is approaching a higher-timeframe bearish order block, which is expected to act as resistance.

The current pullback is developing in a well-defined manner, raising the possibility of a trend reversal if bullish momentum persists. Traders should monitor the price action for potential bearish continuation signalled by a bearish break of structure (BOS)or a breakout that could invalidate the broader downtrend.