USD/JPY: The Sun Sets on the Rising Sun's Currency?

The USD/JPY, a pair often gauged as a barometer of risk sentiment, has given traders a plot twist on the four-hour chart. Let's dive into the details:

The pair had been showcasing a bullish momentum since July 14 on the H4 chart. However, a noteworthy event transpired on Friday when the USD/JPY, after attaining its 10-month zenith at 147.376, experienced a bearish jolt. This led to the breach of its two-week uptrend line, signaling a potential change in the prevailing trend.

Post this breach, sellers made their presence felt by ensuring the price stayed subdued below the 34-EMA. This action was further accentuated as the pair dipped below the prior low of 145.667, bolstering the bearish sentiment.

Downward Trajectory & Key Levels:

If sellers continue to dominate the trading landscape, the pair could be setting its sights on:

- An immediate downside target at 145.130.

- A further descent could see it touching 144.798. This level is particularly noteworthy as it aligns with the 161.8% Fibonacci projection of the recent upswing spanning from 145.667 to 146.536. Historically, this level has acted as a magnet for traders.

Oscillators & Candlesticks:

The Relative Strength Index (RSI) is currently navigating the selling domain, underscoring the prevailing bearish sentiment. Complementing this is the Momentum indicator, which is diving beneath its 100 threshold, indicating a strengthening bearish undertow. Meanwhile, the presence of candlesticks with elongated shadows and diminutive bodies hints at market volatility, albeit without significant momentum.

The Bullish Counter-Narrative:

For the optimists, a resurgence above the 34 EMA could pave the way for a bullish correction, targeting 146.536. It's crucial to note that a decisive move above 146.536 might nullify the current bearish prognosis.

Conclusion:

The recent technical developments on the USD/JPY four-hour chart suggest a bearish bias. However, as the market narrative unfolds, traders are advised to keep an eye on the aforementioned key levels, employ risk management strategies, and blend the technical outlook with macroeconomic cues.

Disclaimer: The above analysis is purely for informational purposes and should not be construed as investment advice. Always consult with a financial advisor before making any trading decisions.