The USD/JPY pair has been on a strong bullish run in recent weeks, climbing steadily within a well-defined rising wedge pattern on the 4-hour chart. However, price action now suggests that the pair might be nearing a potential reversal zone, as momentum begins to slow and sellers start to test the lower boundary of the pattern.
As of writing, USD/JPY is trading around 153.42, slightly off its recent highs near 154.50, indicating that buyers may be losing strength. Let’s take a closer look at the technical setup and possible trade opportunities ahead.
📈 Technical Overview
The 4-hour chart reveals a rising wedge, a pattern formed by higher highs and higher lows converging toward a single point. This formation typically signals a loss of bullish momentum and often precedes a bearish breakout.
The 9-period Simple Moving Average (SMA) is still pointing upward, but price action has started to flatten around the midline of the wedge. Sellers have already pushed the pair lower after a rejection from the upper boundary near 154.50, suggesting early signs of exhaustion among buyers.
The lower trendline support is currently holding around 153.00 – a key level to watch. A decisive break below this level could trigger stronger downside momentum.
⚙️ Key Technical Levels
| Type | Level | Description |
|---|---|---|
| Resistance 1 | 154.50 | Upper wedge boundary / recent swing high |
| Resistance 2 | 155.00 | Psychological round number |
| Support 1 | 153.00 | Rising wedge lower trendline |
| Support 2 | 152.30 | Minor horizontal support |
| Support 3 | 151.80 | Previous consolidation zone |
📊 Price Outlook and Scenarios
🔻 Bearish Scenario – Reversal in Play
If USD/JPY breaks below the 153.00 support, it would confirm the rising wedge breakdown, signaling a potential trend reversal. Such a move could lead to a corrective decline toward 152.30 and then 151.80 in the short term.
Momentum indicators like RSI and MACD are already showing bearish divergence, hinting that the uptrend is running out of steam.
🔺 Bullish Scenario – Breakout Continuation
If buyers manage to defend the wedge support and push the price above 154.50, the bullish trend could resume. In that case, USD/JPY could target 155.00 and possibly 155.40 in the coming sessions. This scenario would invalidate the bearish wedge setup and indicate continued strength in the U.S. dollar.
🎯 Trade Signal – USD/JPY 4H Setup
| Direction | Entry | Targets | Stop Loss | Risk Level | Confidence |
|---|---|---|---|---|---|
| 📉 Sell | Below 153.00 | 152.30 / 151.80 | 153.70 | Moderate | ⭐⭐⭐⭐ |
| 📈 Buy | Above 154.50 | 155.00 / 155.40 | 153.90 | Cautious | ⭐⭐⭐ |
Bias: Bearish while below 154.50
Timeframe: 4-Hour Chart (Short to Medium Term)
💬 Analyst’s View
The market structure suggests that USD/JPY is at a critical turning point. The rising wedge formation, combined with slowing momentum, increases the probability of a bearish correction in the short term. However, given the overall strength of the U.S. dollar across major pairs, traders should wait for a clear breakout confirmation before entering positions.
A break below 153.00 could attract aggressive selling pressure, while a sustained move above 154.50 could trigger stop-loss hunting and push the pair toward new highs.
⚠️ Risk Management Reminder
As always, it’s essential to use proper position sizing and tight stop losses when trading breakout patterns like this. Wedges can sometimes produce false breakouts, so waiting for candle confirmations and volume spikes is key before taking any trades.
🧭 Conclusion
USD/JPY continues to trade within a narrowing wedge pattern, signaling an imminent directional move. Whether it breaks higher or lower, the next few sessions will likely bring increased volatility and potential trading opportunities.
Traders should stay alert around 153.00 support and 154.50 resistance, as a confirmed breakout in either direction could define the short-term trend heading into next week.
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