Overbought USD/JPY Signals Potential Consolidation
Solid ECN—The U.S. Dollar traded above the 78.6% Fibonacci level against the Japanese yen at about 157.2. The primary trend is bullish; however, the Demarker indicator signals an overbought market by hovering above the 0.7 level. This development in the indicator means the USD/JPY price might consolidate to the lower resistance levels.
Additionally, the 4-Hour chart shows the Bollinger bands are narrowing, signaling a range market. This aligns with the Demarker signal, pointing to the momentum easing on the uptrend.
From a technical standpoint, the USD/JPY is in a bull market, but the U.S. Dollar appears overpriced. It is likely for the bears to dip the price below the 157.0 immediate support. If this scenario unfolds, the consolidation phase may extend to the 61.8% Fibonacci at 156.4. This level provides a decent entry point to join the bull market.
Conversely, the key resistance level is at 157.7. Should the bulls cross above this key barrier, the uptrend will likely resume. If this scenario unfolds, April's high at 160.2 could be set as the next significant barrier.