The USDJPY currency pair is showing signs of potential weakness after reaching the upper boundary of the Bollinger Bands, which often serves as a dynamic resistance zone. This situation is reinforced by the Stochastic indicator currently positioned in the overbought territory, suggesting that prices may have entered a state of excessive buying and could soon experience a correction. Should selling pressure escalate around this level, USDJPY has a good chance of reversing its course and moving downwards towards the middle Bollinger Band as an initial target for decline.
To validate this downward movement, traders should keep an eye on the price action and the nearest support levels that could indicate potential future price movements. If USDJPY fails to break through the resistance and starts to form a bearish pattern, such as a candlestick reversal or negative divergence on momentum indicators, the likelihood of a downward trend will increase.
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USDJPY shows further signs of potential decline after experiencing a breaklow from a bullish channel and executing a pullback into the area of a support level that has now turned into resistance. This scenario is further corroborated by the Commodity Channel Index (CCI) being in the oversold region, indicating that selling pressure remains strong. If prices fail to re-enter the bullish channel and face rejection at the pullback zone, then bearish momentum may continue with a target drop towards the next support level of 149,840.
Technical Reference: sell while below 151,090
Potential Stop Loss 1: 150,895
Potential Stop Loss 2: 151,090
Potential Take Profit 1: 150,020
Potential Take Profit 2: 149,840
