USD/JPY Price Analysis: Bullish Momentum Holds as Falling Wedge Forms

• The USD/JPY 1 hour chart shows the formation of a bullish continuation chart pattern, which keeps the bulls hoping for higher prices.
• USD/JPY Price Analysis: Long-term remains biased to the downside unless it breaks resistance around 133.00.

He USD/JPY It erases Wednesday’s gains and targets the 130.30-132.90 range lows during the North American session, looking for a break below the 20-day EMA at 130.66. As of this writing, USD/JPY is trading at 131.11, losing 0.18% from its opening price.

From a daily chart perspective, USD/JPY remains biased to the downside, although it has been trailing the 20-day EMA for the past three days, unable to break above 130.00. Oscillators such as the Relative Strength Index (RSI) and the Rate of Change (RoC) suggest a bearish continuation. However, the Bank of Japan’s dovish stance prevented market participants from taking short positions.

In the short term, the USD/JPY one hour chart shows the formation of a falling wedge, suggesting a bullish continuation, which could lift prices towards 131.60 and the January 11 high at 132.87. Although the Relative Strength Index (RSI) points higher, it remains in bearish territory, with a flat slope, but the Rate of Change (RoC) shows buying momentum. Therefore, the mixed signals suggest caution.

USD/JPY buyers need to recapture 131.82, Thursday’s high. Once this is done, it would pave the way towards 132.00, 132.87 and the psychological barrier of 133.00. As an alternative scenario, the bearish continuation would resume if the falling wedge is broken to the downside. Therefore, the first support for USD/JPY would be 130.34, February 9 low. A break below would expose the daily pivot points S2 and S3, each at 130.21 and 129.83.

USD/JPY one hour chart

Key USD/JPY Technical Levels