USDJPY Retraces After Reaching Major Demand Level

Market Analysis – May 5

The USDJPY currency pair recently pulled back to the significant demand level of 151.00 for a retest after breaching this zone. This move enabled sellers to short the market, resulting in a price decline to the next support level of 140.40. Following the price retest of the 140.30 demand level, the market formed a swing low.

USDJPY Key Levels

Demand Levels: 140.30, 137.20, 130.40

Supply Levels: 151.00, 157.40, 161.50

USDJPY Retraces After Reaching Major Demand Level

USDJPY Long-term Trend: Bullish

The USDJPY bearish trend began in January after the price hit the resistance level of 157.40. The market then formed a perfect bearish structure as it broke through the 151.00 demand level. At this point, sellers triggered a run on stops as the price pulled back to 151.00.

The Stochastic indicator showed overbought conditions when the price pulled back to 151.00, further reinforcing the bearish trend. This led to a price drop to the 140.30 support level, where the Stochastic eventually became oversold.

USDJPY Short-term Trend: Bearish

In the short term, the market has pulled back to a low-quality bearish order block just below 148.00. This order block doesn’t feature a prominent fair value gap. The Stochastic is overbought once again on the higher timeframe, leading to a lower timeframe swing high formed in the zone of the higher timeframe bearish order block. Based on this analysis, the price is expected to resume its bearish direction.

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