Chart Art: USD/JPY Testing Long-Term Ceiling

USD/JPY appears to be retreating from the very top of its long-term range, possibly setting its sights back on near-term support levels.

Or can it attempt a bullish breakout?

Take a look at these inflection points on the daily chart!

This dollar pair has been on a tear over the past month, as traders had been pricing in lower odds of further Fed easing while having doubts about Bank of Japan tightening.

Last week’s major developments appear to have flipped the script entirely, leading USD/JPY to hit a wall that Vecna himself couldn’t even pass through.

Can price retreat to nearby support levels from here?

Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!

After bouncing off the long-term resistance near R1 (158.40) USD/JPY is crawling below the pivot point level (155.61) and could be setting its sights on S1 (153.33) next. Further downside pressure could drag the pair down to S2 (150.33) near the 100 SMA dynamic inflection point.

Just keep in mind, however, that the 100 SMA remains above the 200 SMA to suggest that the path of least resistance is to the upside or that there’s still chance a bullish breakout could take place. If this happens, watch out for a potential move past the latest highs onto the next bullish barrier at R2 (160.69) and beyond.

Don’t forget to brace for extra volatility since the highly-anticipated December FOMC statement is coming up!

Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.

Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.