USDJPY Bullish Reversal: Nearing a Critical Buy Signal
17 July 2023
The USDJPY currency pair has been undergoing a notable bullish reversal after a steep decline through the first half of July. Towards the end of last week, the price seems to have found support, indicating a potential halt in the downswing.
The support level around 138 is critical, as it correlates to the 38.2% Fibonacci level. More importantly, this area served as a significant support and resistance level at the end of 2022 and the first half of 2023 respectively. Currently, a head and shoulders pattern has emerged around this support, as depicted by the blue rectangle. This setup is what buyers are looking for.
The buy signal is likely to be triggered when the price rises above the black uptrend line, a scenario that holds considerable probability. Contrarily, the alternative scenario would be the price dropping further and breaking through the yellow area, which would prompt a sell signal.