The Rising Tide: An Analysis of the USDJPY Pair in Current Market Conditions
09 June 2023
Today, we delve into the world of Forex, specifically the USDJPY currency pair. The recent weakening trend observed in both the US dollar (USD) and the Japanese yen (JPY) in the latter half of the week draws our attention to their upcoming performance.
In terms of long-term prospects, the USDJPY pair seems to be on an upward trajectory. An important breakthrough occurred on the 18th of May, when the price surpassed the horizontal resistance at 137.6 (blue). This decisive event not only signaled a buying opportunity but also marked a departure from the symmetric triangle pattern (black). Consequently, this breakout is seen as a harbinger of a mid-term buying signal.
Post-breakout, the price experienced an upward surge, followed by a period of stagnant growth, forming a pennant-shaped correction (green). Currently, the pair is situated within the pennant, having rebounded off its lower boundary.
The present market sentiment leans towards the positive, fueling anticipation for a price break above the pennant's upper boundary. Such an event would invariably lead to a new buying signal, a crucial turning point for traders. However, in a contrasting scenario, if the price breaches the pennant's lower boundary, a selling signal would be generated, indicating a potential market downturn.
The mid-term target, in the event of a selling signal, is set around the support levels of 137.6. These levels, represented by the blue color on our chart, could serve as potential areas of interest for traders in the face of a downward trend, although the chances of that happening are currently rather low.