#052: Long Investment Opportunity on USD/JPY
The USD/JPY exchange rate is experiencing a particularly interesting market phase, where underlying bearish pressure coexists with technical signals of a possible short-term reaction. After a sharp decline, the price showed signs of slowing, suggesting the entry into a consolidation phase, typical of markets absorbing directional excess.
From a structural perspective, the main trend remains down, consistent with a sequence of lower highs and lower lows on higher time frames. However, this very trend has favored a progressive accumulation of speculative positions in the same direction, creating the conditions for a potential technical rebound. In such environments, the market often tends to move against the grain, hitting areas of liquidity before deciding on the next direction.
Price action analysis highlights how the latest phases of decline have been accompanied by increased volatility and impulsive movements, elements that often herald a phase of rebalancing. The appearance of candlesticks with pronounced wicks and less directional closes suggests that selling pressure is gradually diminishing, leaving room for corrective reactions.
From a volume perspective, the market is also showing signs of absorption. After the initial push, volumes tend to stabilize, indicating that the most aggressive traders have already taken positions. In these environments, subsequent movements are often driven by technical re-entries and position coverings, rather than new directional initiatives.
On the macroeconomic front, the monetary policy differential continues to support the dollar in the medium to long term, while the yen remains structurally weak. However, in the short term, this imbalance does not prevent the market from experiencing temporary rebounds, especially when positioning becomes excessively unbalanced. It is precisely in these phases that the exchange rate tends to move more technically than fundamentally.
The intermarket picture is currently not showing signs of strong risk aversion that would favor a decisive flow towards the yen. This reduces the likelihood of immediate downward accelerations and strengthens the hypothesis of a price breathing space. Bond and currency markets appear to be moving in a more orderly fashion, without sudden shocks.
In summary, USD/JPY is in an unstable equilibrium: the main trend remains bearish, but the market is showing signs of a corrective phase. In these contexts, patience and a good understanding of the structure become crucial, as the most interesting moves often emerge precisely when consensus appears excessively biased in one direction.
As always, the price will provide clarity. The market's ability to sustain any rebounds or, conversely, decisively resume its main direction will offer valuable insights into institutional investors' intentions in the coming sessions.
Long
