Hi Traders! USDJPY forecast update and follow up is here. On June 1st I shared this “USDJPY Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!

My Idea

In my point of view, on the H4 chart there are two possible scenarios, which are as follows:

Scenario 1

The price might move higher from the current zone and reach the key resistance zone formed by the 100%(110.599) Fibonacci expansion level of the first wave, respect it and move lower from this zone. Alternatively if the price moves higher further, breaks and holds above the invalidation level (marked in red line) then this bearish view will be invalidated.

Scenario 2

Alternatively if the price moves lower and if we get a valid breakout below the most recent uptrend line and the strong support zone, we may then consider it as a validation for the bearish view and then we may expect the price to continue lower further.

So based on these two possible scenarios my view here is bearish and I expect the price to move lower further until the invalidation level holds.

USDJPY H4(4 Hours) Chart Current Scenario

On the H4 chart my view was bearish and I was expecting the price to move as per two possible scenarios. The price action followed my analysis and moved as per scenario 1. The price moved higher and reached the key resistance zone formed by the 100%(110.599) Fibonacci expansion level of the first wave, respected it and bounced lower from this zone. We also had a false break with bearish divergence that has formed between the first high that has formed at 110.196 and the second high that has formed at 110.316 based on the MACD indicator which we may consider as facts provided by the market supporting the bearish view. Most importantly the price was holding below the invalidation level and there were no signs opposing this bearish view. The price then moved lower further and delivered around 120 pips move so far.
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted us and took the right action according to that.

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