USD/JPY 4H Timeframe Analysis

USD/JPY 4H Timeframe Analysis

Trend Analysis
On the 4-hour timeframe, USD/JPY is in a major uptrend. The price recently broke through a minor key resistance at 154.900, which is now acting as minor support. After this break, the price surged and broke through the next minor key resistance at 156.000, signaling further bullish momentum.

At this point, manipulation began, where the price entered a consolidation phase as it accumulated buy orders. The price tested 156.000 three times, showing significant buy volume in the zone. After this accumulation, the price has broken the minor key resistance and is now in a liquidity zone, suggesting that a huge liquidity move is possible as a result of the increased buyer activity.

Price Action Expectation:
Our objective is to wait for the price to break above the minor key resistance at 156.000 and close above it on the 4-hour timeframe. This will confirm the continuation of the uptrend, and we expect a potential liquidity move upwards.

The next target is 161.720, where the next minor key resistance lies. This level is a key milestone for price progression, and we anticipate a strong upward move due to the accumulation of buy orders in the current liquidity zone.

Trade Setup:

Trade Type: Buy Stop
Entry: 156.400 (after the price closes above the minor key resistance at 156.000, signaling trend continuation)
Stop Loss: 154.800 (below the liquidity zone, providing protection against false breakouts)
Take Profit: 161.720 (targeting the next minor key resistance level)
This setup leverages the break above the 156.000 level and aims to capture the upward momentum towards the next resistance at 161.720. The current liquidity zone indicates a strong probability for a continuation of the bullish trend.

Fundamental Outlook:
The BOJ Policy Rate decision revealed an actual rate of <0.50%, which was in line with the forecast. This is a continuation of Japan's ultra-loose monetary policy, suggesting a weaker yen. The BOJ's stance to keep rates low or negative further weakens the Japanese currency, supporting the USD/JPY bullish trend.

Impact of the BOJ Decision:
The weak yen created by the BOJ's policy aligns with the technical setup, as it makes USD/JPY more attractive. The lower rates in Japan enhance the yield differential with the U.S. dollar, supporting continued bullish pressure on the pair.

Risk Management
Risk-to-Reward Ratio: Ensure a 1:2+ risk-to-reward ratio for optimal returns.
Position Sizing: Adjust your position size in line with your account equity and risk tolerance.
False Breakout Caution: Watch for any potential false breakouts. Adjust your stop-loss if needed, especially if the price fails to hold above the 156.000 level.

Conclusion:
The USD/JPY setup is targeting a continuation of the uptrend, supported by both technical patterns and BOJ policy. The breakout above 156.000 signals a potential upward move, and the liquidity zone confirms the high probability of further bullish momentum. By using the buy stop order at 156.400, the trade aims to capture the next leg of the uptrend with a strong risk-to-reward ratio.

Trading involves substantial risks and may not be suitable for all investors. Always seek guidance from a financial professional if you’re unsure about trading decisions.