USDJPY Is a Major Sell-Off Coming? Key Levels to Watch!

29 окт.

USDJPY has been on a tear these past few weeks, charging toward some key higher timeframe resistance areas.


Checking out the Monthly chart, I’m spotting what looks like a major trend reversal pattern. In July, USDJPY hit 162, and the resulting sell-off did two big things: it broke the long-term trendline and took out the last swing low from the previous leg up. (see chart below)





Also, on the Monthly chart, you’ll notice that when price broke up through the 152 resistance to reach 162, there was a notable lack of momentum compared to earlier moves in this trend. We’re also seeing clear bearish divergence on the MACD—all signs of a major topping pattern and a likely trend reversal.


Zooming into the weekly chart, and drawing fib retracement levels from the July drop, we’re right at the 0.618 level, aligning with the outside of the previous trendline.





On the daily chart, we’ve reached what I consider a key SELL zone between 154-155. This level saw a 1500-pip drop in just days at the start of August.





With three key confluences now in play and the Monthly chart showing a strong trend reversal pattern with MACD divergence, we could say “the stars are aligning” for this one.


My approach? I’ll wait for the price to break above 154 and head toward 155, then turn on my TRFX indicator to look for 4-hour sell signals.


Even if the market pushes higher, I’ll be on the lookout for more selling opportunities, especially if we move closer to 160. With all these factors lining up and the Bank of Japan’s interest rate decision this week, we could see a significant USDJPY sell-off.


But I’ll WAIT for the SELL SIGNAL to confirm.


If this major reversal takes shape, the price could drop quickly to this year’s low at 139.500, with possible profit-taking here and buyer re-entry, before pushing lower in the long term towards 127 or beyond.


Note: This is a long-term, higher timeframe perspective and not a short-term trade.


Let me know your thoughts below!