Japanese Yen Short-Term Outlook: USD/JPY Correction Continues

Japanese Yen Technical Outlook: USD/JPY Short-term Trade Levels

• Japanese Yen attempting third consecutive weekly advance (first time since March)
• USD/JPY plunge now testing multi-month uptrend support- risk for price inflection
• Resistance 147.68-148, 148.67, 149.20/45 (key)- Support 146.30, 144.76/99 (key), 142.48

The Japanese Yen rallied more than 3.4% against the US Dollar since the monthly / yearly highs in USD/JPY with the plunge now testing multi-month uptrend support. The battle lines are drawn heading into the December open with the USD bears seemingly poised for a deeper pullback. These are the updated targets and invalidation levels that matter on the USD/JPY short-term technical charts.

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Japanese Yen Price Chart – USD/JPY Daily

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

Technical Outlook: The Japanese Yen is trading within the confines of a descending pitchfork extending off the yearly high (blue) with USD/JPY now testing basic trendline support extending off the March low (red). While a break below the November opening-range low (ORL) does keep the focus lower into the close of the month, the decline is now approaching key levels of support which could disrupt this immediate decline and the bears may be vulnerable into the December open while above this slope.

Japanese Yen Price Chart – USD/JPY 240min

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

Notes: A closer look at Yen price action shows USD/JPY breaking below a key pivot zone yesterday around the 2022 high-day close (HDC) at 147.68-148- price is testing this threshold as resistance today.

A break below the March trendline (red) exposes two key levels at the 38.2% Fibonacci retracement of the July rally at 146.30 and 144.76/99- a region defined by the June close-high and the 100% extension of the monthly decline. Look for possible downside exhaustion / price inflection on stretch into this zone IF reached.

A topside breach here would threaten a recovery back towards 148.67 with near-term bearish invalidation now lowered to the November ORL / 50% retracement / objective weekly-open at 149.20/45. Ultimately, a daily close above the 2022 close high at 150.14 would be needed to mark uptrend resumption.

Bottom line: The USD/JPY correction is underway and keeps the near-term outlook weighted to the downside while within this formation. From at trading standpoint, rallies should be capped by the weekly open IF price is heading lower on this stretch with a close below 146.30 needed to fuel the next leg lower- look for a larger reaction on a spill towards 145 IF reached. I’ll publish an updated Japanese Yen Weekly Forecast once we get further clarity on the longer-term USD/JPY technical trade levels.  

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

Follow Michael on X @MBForex