USD/JPY Price Analysis: Shorts about to be squeezed as buyers eye 140.00

USD/JPY extended its rally for the seventh consecutive week, gaining some 2.19%.
The USD/JPY negative divergence in the daily chart might pave the way for a pullback.
A rising wedge remains in play and, once broken, targets the USD/JPY might fall towards 130.00.

Christian Borjon Valencia FXStreet

The USD/JPY reached a fresh 24-year high around 139.38, though of late dipped near the 139.10s area, as market participants scaled back expectations of a 100 bps rate hike following Wednesday’s hot US CPI reading, which opened the door for speculations of the aforementioned. At the time of writing, the USD/JPY is trading at 139.03, recording a minimal gain of 0.03%.

USD/JPY Thursday’s session began around the 137.50 figure, near the bottom of a rising wedge, and rallied sharply towards a fresh 24-year high at 139.38. However, the major retreated near 138.50 before launching a renewed assault above 139.00, where the price settled near the end of the New York session.

USD/JPY Daily chart

The USD/JPY daily chart remains upward biased, though price action looks overextended due to the parabolic rally, which began around March 2022. Oscillators are again entering overbought conditions, illustrating a negative divergence, which means that price action is printing higher highs, while the Relative Strength Index (RSI) is registering lower peaks, opening the door for a pullback.

Therefore, if the above scenario plays out, the USD/JPY's first support would be July 14 daily low at 137.28. A breach of the latter will send the pair tumbling towards the July 6 low at 134.94, followed by the June 16 cycle low at 131.49.

USD/JPY Key Technical Levels

Overview
Today last price	139.03
Today Daily Change	1.75
Today Daily Change %	1.27
Today daily open	137.29

Trends
Daily SMA20	135.77
Daily SMA50	132.43
Daily SMA100	127.41
Daily SMA200	120.86

Levels
Previous Daily High	137.87
Previous Daily Low	136.69
Previous Weekly High	136.56
Previous Weekly Low	134.78
Previous Monthly High	137
Previous Monthly Low	128.65
Daily Fibonacci 38.2%	137.42
Daily Fibonacci 61.8%	137.14
Daily Pivot Point S1	136.7
Daily Pivot Point S2	136.11
Daily Pivot Point S3	135.52
Daily Pivot Point R1	137.88
Daily Pivot Point R2	138.46
Daily Pivot Point R3	139.05

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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