USD/JPY has recently experienced a decline to a major trendline, finding support at around 152.55. Despite this correction, the pair remains in an uptrend on both short and medium-term bases. According to the technical analysis principle that “the trend is your friend,” there is a strong possibility of a recovery and a continuation of the uptrend. This indicates that the odds are in favor of a potential push higher in the near future.
Looking at the USD/JPY 4-hour chart, a break above the 154.71 high from November 7 could potentially renew the uptrend and lead to further upward movement towards the resistance level at 155.24, which was last seen on July 30. Breaking above this resistance could signal a stronger bullish trend, possibly setting a target at 157.86, which was the high on July 19. This suggests that there is significant potential for the pair to continue its upward trajectory in the coming days.
On the other hand, a break below the major trendline as well as below the 151.29 support level could indicate a potential bearish reversal in the short term. Should this occur, there may be further downside momentum leading to a target at 150.15, where support from the 100-day Simple Moving Average (SMA) could come into play. This scenario would suggest a shift in the trend direction and potentially open up opportunities for short positions.
In conclusion, the recent decline in USD/JPY to a major trendline offers a potential buying opportunity for traders looking to capitalize on the uptrend in the pair. With support at 152.55 and a bullish outlook in the short and medium-term, there is a high probability of a recovery and continuation of the uptrend. A break above key resistance levels could further validate this bullish bias, while a break below support levels may signal a bearish reversal in the short term. Traders should keep a close eye on these levels to determine their trading strategy for USD/JPY in the coming days.
