USDJPY: Will the Bullish Trend Persist?

USDJPY: Will the Bullish Trend Persist?

2024-03-05 • Updated

  • Bullish Scenario: Intraday buys above 149.80 with TP: 150.50, TP2: 150.80, and TP3: 151.00 and 151.90 medium-term, with S.L. below 149.60 or at least 1% of account capital*. Apply trailing stop.
  • Bearish Scenario: Sales below 150.50 with TP1: 149.80, TP2: 149.17, and 147.62 medium-term with S.L. above 150.80 or at least 1% of account capital*.

Fundamental Environment

The Bank of Japan has been postponing its plans to abandon its moderate policy stance as wage growth is still not strong enough to sustainably keep inflation above the 2% target.

This week, the key trigger for the pair will be the testimony of Federal Reserve Chairman Jerome Powell before Congress on Wednesday, who may reiterate that there is no urgency to cut rates. The Federal Reserve is less likely to cut interest rates before gaining confidence that inflation will sustainably return to the 2% target.

Analysis from a daily chart. Volume Profile and Structure.

The pair has maintained a bullish technical structure since January, aiming to break the 2022 and 2023 resistance at 151.96 to extend the multi-month bullish trend, although it remained consolidated in February below its resistance at 150.88, leaving a volume concentration around 150.48, after a brief rebound from a high-volume node of the month around 149.36.

All of the above leaves the scenario open to continue bullish if prices decisively break above the high volume zone and February resistance at 150.88, aiming to reach the 2022 and 2023 resistance at 151.90.

However, as long as prices remain below 150.00, a new correction towards 149.00 and 148.56 can be expected, with attention to the last relevant support of the bullish trend at 147.62, whose confirmed breakout with a second minimum will reverse the bullish trend.


Scenario from H4 chart:

Consolidation could continue in the short term given the proximity of supply and demand zones, so sales can only be considered while prices remain below 150.40, considering the latest supply zones at 150.50 and 150.70, which will test the buy zone at 149.80 and 149.17. The breakout of the buy zones will extend the decline towards 148.79 with a possible challenge to the 147.62 support.

On the other hand, the strong bullish reaction from the buy zones that trigger a breakout of the sell zones between 150.50 and 150.80, with the consequent decisive breakout of the February resistance at 150.88, will be the signal that yen weakness will drive prices towards the 151.43 resistance and the highest in the last two years.

*Uncovered POC: POC = Point of Control: It is the level or zone where the highest volume concentration occurred. If there was a bearish movement from it previously, it is considered a sell zone and forms a resistance zone. Conversely, if there was a bullish impulse previously, it is considered a buy zone, usually located at lows, thus forming support zones.


**Consider this risk management suggestion

**It is very important that risk management be based on capital and traded volume. Therefore, a maximum risk of 1% of the capital is recommended. It is suggested to use risk management indicators like Easy Order.


This document does not constitute a recommendation to buy or sell financial products and should not be considered as a solicitation or offer to engage in transactions. This document is economic research by the author and is not intended to provide investment advice or solicit securities or other types of investment transactions at FBS. Although every investment involves some degree of risk, the risk of loss in trading forex and other leveraged assets can be substantial. Therefore, if you are considering trading in this market, you should be aware of the risks associated with this product to make informed decisions before investing. The material presented here should not be construed as advice or trading strategy. All prices mentioned in this report are for informational purposes only.



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