USDJPY shows signs of trend change from an upward direction in the market as it approaches upthrust after distribution (UTAD). On the daily timeframe, the market keeps rallying and forming higher highs and higher lows. Until March 4, 2022, the market had been in an accumulation phase, only to break out in the same upward direction as before the consolidation.
USDJPY Major Levels
Resistance levels: 135.280, 147.630 Support levels: 131.350, 125.860
USDJPY Long-term Trend: Bearish
The bulls appear to be offloading their long positions in favour of the bears. As indicated by the Simple Moving Average (SMA), the current market trend in the upward direction began on March 4, 2022, following the accumulation phase. Prices rose to the previous resistance level of 125.860, only to breach it and face a higher resistance level of 131.350. The previous resistance level at 131.350 pushed the USDJPY market into a reaccumulation zone, resulting in a quick rally and a fair value gap that will need to be filled later.
After breaking out of the accumulation area, the USDJPY market rallied towards the distribution area, hitting resistance at 135.280 before diving down to form a swing low at the 131.350 support level, indicating a sign of weakness (SOW) of the market trend in the upward direction. The Moving Average Convergence Divergence Indicator revealed that the market is currently ranging around the resistance level of 135.280. Once the market has finished distributing, the USDJPY is expected to fall, forming the markdown phase according to the Wyckoff law of the price cycle.
USDJPY Short-term Trend: Ranging
The Wyckoff distribution area can be seen in detail over the four-hour timeframe. Phase A denotes the end of the previous upward market trend. Preliminary supply (PSY) and the buying climax (BC) provided the first significant evidence of supply entering the market until the end of phase A on June 16, 2022. In phase B, the bulls are liquidating their long positions, while the bears are opening short positions in anticipation of the markdown. The USDJPY market is expected to complete the Wyckoff distribution area and fake out the resistance level at 135.280, then sink towards the support level at 125.860, after which the market might continue the prior market trend in an upward direction.
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