Japanese Yen Price Chart – USD/JPY Weekly
Technical Outlook: In last month’s Japanese Yen Technical Forecast I noted that the, “USD/JPY rally has responded to technical resistance and threatens a larger correction within the confines of the yearly uptrend.” USD/JPY has now plunged nearly 9% off the yearly highs with the decline breaking below February channel support. Although the move threatens a larger pullback in the weeks ahead, the immediate decline is challenging the upper bounds of a key pivot-zone here at 137.25-138.62– a region defined by the 38.2% retracement of the yearly range, the July high-week close and the 61.8% Fibonacci retracement of the August advance. The focus is on a reaction off this threshold in the days ahead for guidance.
Initial weekly resistance now eyed the 38.2% retracement of the October sell-off at 143.61 with medium-term bearish invalidation now lowered to the 61.8% retracement / 1998 high / 2022 high0week close at 146.79-147.65. A break lower from here would expose parallel support (red dotted-line, currently ~136) backed by the April / May highs around 131.25– both zones of interest for possible downside exhaustion / price inflection IF reached.
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Bottom line: The USD/JPY has broken below yearly uptrend support with the decline already checking the first major pivot zone here around 138. From a trading standpoint, rallies should be capped by 143.61 IF price is indeed heading lower on this stretch with a break / close below parallel support needed to suggest a larger trend reversal may be underway. I’ll publish an updated Japanese Yen Short-term Outlook once we get further clarity on the near-term USD/JPY technical trade levels.