Will USD/JPY Break Free from Bearish Grip?
18 December 2023
The American Dollar to Japanese Yen pair is currently navigating through an interesting phase, marked by a bullish correction amidst an overarching bearish sentiment. The pair's journey is characterized by a series of lower lows and lower highs, adhering to the confines of a red downtrend line. This pattern was particularly underscored by Wednesday's notable decline, further cementing a bearish outlook.
However, since Thursday, there's been a shift. The pair has embarked on a bullish correction, forming a pattern akin to a flag, delineated by black lines. Notably, this correction occurs under the shadow of a crucial horizontal support level at 142.5, highlighted in orange. The current market stance below both the orange line and the upper black line of the flag pattern suggests a continued bearish sentiment.
Should the pair break above these critical levels – the orange resistance and the upper boundary of the flag pattern – it could signal a short-term positive shift. Such a move might suggest an intent to approach the red downtrend line. Nonetheless, this potential upswing should be viewed with caution, as it might represent a mere interlude in the broader bearish narrative.