Japanese Yen Forecast: USD/JPY Bears Retreat- Battle Lines Drawn

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• Japanese Yen under pressure for second week as USD/JPY rebounds off trend support
• USD/JPY risk for topside exhaustion / price inflection into trend resistance- weekly range breakout imminent
• Resistance 148.54-149.60, 149.99 (key), 151.95– Support 146.42, 144.17, 141.02

The Japanese Yen is off 0.40% since the start of the week with USD/JPY attempting to mark a second weekly advance. A 4.6% rebound off trend support has offered a reprieve to the recent sell-off and the battle lines are drawn as the bears look to reset. These are the levels that matter on the USD/JPY weekly & daily technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen setup and more. Join live on Monday’s at 8:30am EST.

Japanese Yen Price Chart – USD/JPY Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Technical Outlook: In last month’s Japanese Yen Technical Forecast we noted that the post-BoJ sell-off had taken USD/JPY, “into a critical support zone at 148.54-149.60- a region defined by the 61.8% Fibonacci retracement of the December rally, the 2022 high close, and the 2023 high-week close (HWC). Note that the 2023 trendline (blue) converges on this threshold over the next few weeks and further highlights its technical significance- we’re looking for a reaction here into the August open.”

Well, we got a reaction with a decisive break two-days later fueling a decline of more than 5.5% into the August open. The sell-off exhausted into longer-term slope support extending off the March 2021 high with price unable to mark a weekly close below the 2024 low-week close (LWC) at 144.63. The market has been attempting to digest this move over the past few days and the focus is on this recovery off support.

Japanese Yen Price Chart – USD/JPY Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

A closer look at the daily chart shows USD/JPY rebounding off the lower bounds of the descending pitchfork formation we presented last month with a tight weekly opening-range taking shape just below the 148.54-149.60 resistance range.

The threat remains lower while below this threshold with a breach / close above the objective August open at 149.98 needed to suggest a more significant low was registered last week. Subsequent resistance eyed at the 2022 high (151.95) with broader bearish invalidation now lowered to the 61.8% retracement / June low-day close (LDC) at 154.21/89.

Initial support rests with the February LDC at 146.42 with a close below the August LDC at 144.17 needed to mark downtrend resumption towards the objective yearly open at 141.02- look for a larger reaction there IF reached.

Bottom line: The USD/JPY breakdown has rebounded off downtrend support and the focus is on possible exhaustion here into downtrend resistance. From a trading standpoint, look for a breakout of the weekly opening-range for guidance- rallies should be limited to the monthly open / median-line IF price is heading lower on this stretch with a close below 144.17 needed to mark resumption. As always, watch the weekly closes here.

We’ll review these charts in-depth in the Weekly Technical Outlook Webinar on Monday.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex