USD/JPY – Trend Exhaustion or Start of a Reversal Phase?

After several consecutive distribution ranges and bearish impulses, USD/JPY is showing early signs of structural recovery on the H1 timeframe. The market has formed a series of consolidation blocks followed by sharp breakdowns, but recent price action suggests that the downward momentum is losing strength.

Technical Outlook:
Structure: The pair has broken out of the most recent consolidation box around 0.00654 – 0.00656, forming a short-term bullish leg.

Trendlines: The prior descending structure has been violated as price created a higher low – the first hint of a potential reversal setup.

Support zones:
0.00655 – key intraday demand zone (former breakout level).
0.00652 – secondary support aligning with the previous accumulation area.

Resistance zones:
0.00660 – short-term target; first test of structure liquidity.
0.00663 – extended target, potential reaction area for profit-taking.

Momentum indicators: RSI is hovering above 55, showing early bullish pressure after long consolidation. EMAs are flattening, signaling the end of the bearish dominance.

Trading Strategy:
- Buy setup (continuation scenario):
Entry: 0.00656 – 0.00657 (retest zone)
Stop Loss: below 0.00653
Take Profit 1: 0.00660 | Take Profit 2: 0.00663
Risk/Reward: approx. 1:2.5
Bias: bullish continuation after a clean breakout.

- Sell setup (only if structure breaks down again):
Entry: below 0.00652
Target: 0.00648
Stop: above 0.00656

Summary:
The overall bias remains neutral-to-bullish for the short term. A confirmed H1 close above 0.00660 will validate the first bullish breakout after several failed recovery attempts. Traders should watch for a potential pullback to 0.00656 before any upward continuation.
If price sustains above this level, the next bullish leg could extend toward 0.00663–0.00665, aligning with the previous structure’s mid-range.
Stay alert — this could mark the start of a trend reversal phase for USD/JPY after weeks of compression.
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