USDJPY Bullish Continuation: Riding the Momentum to 150.90
Muhammad Faraz 
USDJPY Bullish Continuation Riding the Momentum to 150.90
USDJPY has experienced a powerful bullish trend, recently reaching a multi-decade high. The price is now undergoing a healthy pullback and consolidation phase. Our analysis suggests this is a pause within a broader uptrend, projecting a resumption of bullish momentum towards the primary target of 150.9. This prediction is based on the overarching bullish market structure and the presence of a strong support zone that is likely to fuel the next leg higher.
Current Market Structure and Price Action
The long-term market structure for USDJPY is unambiguously bullish, characterized by a sustained series of higher highs and higher lows. The recent pullback from the highs is viewed as a correction within this dominant uptrend, allowing the market to cool off and gather energy for the next potential move upward. The price action is currently compressing, indicating a balance between buyers and sellers. A breakout from this consolidation is expected to resolve in the direction of the underlying trend—which is up.
Identification of the Key Support Zone
The most critical technical element is the Strong Support Zone, which includes the current price area around 147.20 and extends lower. The strength of this zone is derived from:
- Historical Significance: While the chart provided shows a long-term view, the current level is a previous resistance that may now act as support. More significantly, the strong support zone marked on the chart around the 146.00-147.00 area has historically been a pivotal level.
- Technical Confluence: This zone likely aligns with key moving averages (e.g., the 50-day EMA) and Fibonacci retracement levels (e.g., the 38.2% or 50% retrace of the latest bullish impulse wave), adding layers of technical significance.
- Market Psychology: The psychological level of 147.00 and the broader zone represent an area where dip-buyers who missed the initial rally are likely to enter, providing fresh fuel for a bullish move.
This makes the current area a high-probability zone for a bullish reaction and the resumption of the uptrend.
Technical Target and Rationale
Our analysis identifies the following price target:
Primary Target (PT1): 150.90
This level represents the recent multi-decade high and a significant psychological barrier. In strong trends, markets often retest and breach previous highs. A move to 150.90 would confirm the bullish breakout and open the path for a continuation into uncharted territory. This is a classic “make new highs” target in a strong trending market.
Prediction: We forecast that the price will find support in the current zone, build bullish momentum, and break higher to challenge and surpass the 150.90 level.
Risk Management Considerations
A professional strategy is defined by its risk management.
- Invalidation Level (Stop-Loss): The entire bullish continuation thesis is invalidated if the price achieves a decisive daily close below the strong support zone, specifically below 145.50. A break below this level would signal a deeper correction is underway and potentially indicate a failure of the bullish structure.
- Position Sizing: Any long positions taken should be sized so that a loss triggered at the 145.50 invalidation level represents a small, pre-defined percentage of your total capital (e.g., 1-2%).
Fundamental Backdrop
The technical setup for USDJPY is heavily influenced by a potent fundamental divergence:
- Monetary Policy Divergence: The primary driver is the stark contrast between the hawkish US Federal Reserve (potential for higher-for-longer rates) and the ultra-dovish Bank of Japan (BOJ), which maintains negative interest rates. This widening interest rate differential favors a stronger USD against the JPY.
- Yield Dynamics: Rising US Treasury yields make the US Dollar more attractive, fueling carry trades where investors borrow JPY (low yield) to buy USD (high yield).
- Intervention Risks: The key risk to any bullish USDJPY forecast is the threat of intervention by Japanese authorities to weaken the Yen. This creates event risk that can cause sharp, volatile downturns, making tight risk management essential.
Conclusion
USDJPY is in a consolidation phase within a powerful, fundamentally-driven bull market. The weight of evidence suggests a high probability of a bullish resolution, targeting a move to retest and break the 150.90 high. Traders should monitor for bullish reversal patterns or a breakout above the consolidation range as potential entry triggers. Risk must be managed diligently by respecting the key invalidation level at 145.50, especially given the ever-present risk of intervention from Japanese financial authorities.
Chart Source: TradingView
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. All trading and investing involves significant risk, including the possible loss of your entire investment. Always conduct your own research (DYOR) and consider seeking advice from an independent financial professional before making any trading decisions.
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