Another major pullback seems to be underway for USD/JPY, as the pair is closing in on these Fibonacci retracement levels on the daily time frame.
Take a look at these potential inflection points that could be tested in the upcoming trading sessions!
USD/JPY Daily Forex Chart by TradingView
This dollar pair has been forming higher highs and higher lows since May this year, cruising inside a solid ascending channel on its daily time frame.
Price is hitting a ceiling at the channel top and appears to be closing in on the 38.2% Fibonacci retracement level.
Will USD/JPY buyers hop back in at these nearby support zones?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
USD/JPY got a strong boost from political uncertainty in Japan, followed by the victory of Sanae Takaichi who has been advocating additional stimulus and looser monetary policy.
However, the dollar’s rally has also hit a roadblock after trade tensions between the U.S. and China flared once again, flipping the safe-haven switch back in favor of the lower-yielding yen.
Still, reversal candlesticks at any of the Fib levels could suggest that dollar bulls are ready to charge again, possibly taking USD/JPY back up to the channel top or higher. The 50% Fib lines up with R1 (150.01) and a major psychological mark while the 61.8% level is closer to the 149.00 major psychological support.
On the other hand, long red candlesticks closing below the channel bottom could suggest that a longer-term reversal may be in order, potentially dragging USD/JPY down to the bearish targets at S1 (145.53) then S2 (143.27).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
