USD/JPY Technical: Potential countertrend USD corrective rebound on the horizon – heochaua

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<li><strong>The medium-term downtrend phase of USD/JPY in place since the 15 November 2023 high has reached a potential inflection level at 140.25.</strong></li>
<li><strong>A potential countertrend corrective rebound scenario may unfold next.</strong></li>
<li><strong>Watch the first immediate resistance zone at 142.85/143.40.</strong></li>
</ul>
<p>This is a follow-up analysis of our prior report, <em>“USD/JPY Technical: JPY strength remains intact ahead of BoJ” </em>published on 19 December 2023. Click <a href="https://marketpulse.com/forex/usd-jpy-technical-jpy-strength-remains-intact-ahead-of-boj/kwong">here </a>for a recap.</p>
<p>The price actions of <a href="https://www.oanda.com/sg-en/trading/instruments/usd-jpy/">USD/JPY</a> have plummeted lower as highlighted in our prior report despite the lack of monetary policy guidance for an imminent removal of Japan’s short-term negative interest rate in Q1 2024 during the Bank of Japan (BoJ) Governor Ueda’s press conference for BoJ’s recent monetary policy meeting held on 19 December 2023.</p>
<p>All in all, the USD/JPY has shed a total of 1,166 pips (-7.7%) from a 33-year high of 151.91 printed on 13 November 2023 to an intraday low of 140.25 on 28 December 2023 in the ongoing medium-term downtrend phase in place since 13 November 2023 high.</p>
<h2><strong>Medium-term downside momentum has flashed out of exhaustion condition</strong></h2>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-10-54.png"><img loading="lazy" class="alignnone wp-image-809250 size-large" src="https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-10-54-1024×605.png" alt="" width="700" height="414" srcset="https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-10-54-1024×605.png 1024w, https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-10-54-300×177.png 300w, https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-10-54-768×454.png 768w, https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-10-54.png 1508w" sizes="(max-width: 700px) 100vw, 700px" /></a></p>
<p>Fig 1: USD/JPY medium-term trend as of 2 Jan 2024 (Source: TradingView, click to enlarge chart)</p>
<p>The medium-term downtrend of the USD/JPY is still firmly intact as depicted by its price actions that are still trading below the downward-sloping 50-day moving average that is now acting as a medium-term resistance at around 146.70 (also coincides closely with the 50% Fibonacci retracement of the medium-term downtrend from 13 November 2023 high to 28 December 2023 low).</p>
<p>The daily RSI momentum indicator has just flashed out a bullish divergence condition after it hit its oversold region (below 70) on 14 December 2023. These observations suggest that medium-term downside momentum may have been exhausted which reduces the odds of price action to continue downwards to print “lower lows”.</p>
<p>A clearance above 142.85 intermediate resistance (also the area where 20 and 200-day moving averages are acting as a ceiling) may kickstart a more pronounced countertrend corrective rebound to retrace a portion of the ongoing medium-term downtrend phase of the USD/JPY with the next resistances to watch at 144.80 and 146.70 (also the 50-day moving average).</p>
<h2><strong>Watch the 140.25 key short-term support </strong></h2>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-11-20.png"><img loading="lazy" class="alignnone wp-image-809251 size-large" src="https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-11-20-1024×605.png" alt="" width="700" height="414" srcset="https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-11-20-1024×605.png 1024w, https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-11-20-300×177.png 300w, https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-11-20-768×454.png 768w, https://www.marketpulse.com/wp-content/uploads/2024/01/USDJPY_2024-01-02_17-11-20.png 1508w" sizes="(max-width: 700px) 100vw, 700px" /></a></p>
<p>Fig 2: USD/JPY short-term minor trend as of 19 Dec 2023 (Source: TradingView, click to enlarge chart</p>
<p>If the 140.25 key short-term pivotal support manages to hold, the USD/JPY may stage the first leg of the potential countertrend rebound with the immediate resistance zone coming in at 142.85/143.40.</p>
<p>However, failure to hold at 140.25 invalidates the countertrend rebound scenario to reinstate the impulsive down move sequence toward the next immediate support at 139.20 in the first step.</p>