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USDJPY: November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking

Forex MarketCentral Bank Policy TrendsThe Fed
Summary:

As the US dollar continues to weaken, USDJPY highs have fallen significantly, which is likely to close lower with a rare giant bear candle in November. It indicates that the trend in the medium- and the long-term may have reversed. Therefore, shorting at highs is the best option at the moment.

Sell USDJPY
End Time
CLOSED

138.950

ENTRY PRICE

132.000

TGT PRICE

146.000

SL PRICE

129.505 -0.303 -0.23%

3832

Points

Profit

132.000

TGT PRICE

135.118

CLOSING

138.950

ENTRY PRICE

146.000

SL PRICE

Fundamentals

The trend of USDJPY is highly correlated with US interest rate policy. Markets have lowered expectations for further aggressive rate hikes by the Fed since November. More traders believe the Fed will moderate its rate hikes to 50bps in December. As a result, US Treasury yields and the dollar index keep falling, and the yen reaped the benefit explicitly.
Although hawkish voices remain strong within the Fed, repeatedly emphasizing that the terminal interest rate will continue to rise. It is undoubtedly an effort to avoid the premature formation of consistent expectations of easing financial conditions, due to the recent shift in market expectations and the cooling of enthusiasm. which is detrimental to the Fed's anti-inflation mission as well.
In addition, previous data implied that Tokyo's core consumer prices rose year-on-year in November at a 40-year high, and exceeded the central bank target of 2% for the sixth consecutive month. It reveals a sign of widening inflationary pressures, which easing deflationary pressures in the Japanese economy and benefiting the yen.
At present, the dollar may have peaked, and it probably will be weaker in the future. At the same time, USDJPY has also lost its motivation for a strong push, for the scrupling of the power of Japanese government intervention. However, as the Fed's hawkish stance remains unchanged, more evidence should be given to confirm the slowdown in inflation and employment. Besides, another non-farm payroll report and inflation data will be released before the December Fed meeting, which may still disrupt the market in the short term to some extent. Therefore, even if USDJPY has passed the big top, the possibility of a decline is very slim, and it will need to fluctuate at highs for a while to build the top.

Technical Analysis

USDJPY: November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking_1
Trading at the monthly chart, USDJPY has significantly retreated from its highs. It is speculated that the monthly line will close lower with a rare giant black candle at the end, which indicates that the trend in the medium- and the long-term may have reversed. Therefore, shorting at highs is the best option at the moment.
USDJPY: November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking_2
Looking at the daily chart, USDJPY seems to have lost momentum to continue to rise after several government interventions. With the weakening of the dollar, USDJPY has not only broken through the key support around 145.0 but also the 140.0 mark, laying the foundation for a trend reversal. Although there was a rebound last week, the space was limited and the strength was not strong, which just headed to 142.0 before turning downward, and has now fallen below the support around 139.0, opening up a new downside trend.
It is recommended to mainly go short when the price rally to around 139.0. The initial target is set below support around 136.0, the second target is around 132.0, and the stop loss is set above 145.0.

Trading Recommendations

Trading Direction: Short
Entry Price: 138.95
Target Price: 132.0
Stop Loss: 146.0
Support: 132.0/136.0
Resistance: 145.0/142.0
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or signal, or any other product is suitable for you based on your investment objectives and financial situation.

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Winkelmann

Analyst

7 years of stock market, foreign exchange, precious metal and other trading and analysis experience, based on fundamental, technical support, biased towards the top-down transaction logic, focusing on macro cycle and risk control, multi-purpose supply and demand theoretical prediction price Changes, balances the impact of transactions, chips distribution and market sentiment, and steady.

Rank

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598

Win Rate

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P/L Ratio

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Focus on

XAUUSD, BRENT, USDJPY

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