USDJPY Lodged around Confluence holds key to future direction

USDJPY has been on a bearish trend in the last 2 months following the BoJ’s policy intervention sometime in November. In recent weeks, the central bank held its monetary policy meeting and still left its policy approach unchanged, leaving the yen again exposed to market forces to determine its direction. A technical view on the pair shows price is subdued by a descending trendline which aligns with a resistance around 131.550. It is important for traders to observe the price action around this zone before scaling into the market. Our possible market scenarios are

Bullish Scenario:
A convincing break away from the confluence around 131.550 will expose 134.65 peak with sights of the major resistance at 138.100.

Bearish Scenario:
Our current view shows the market trend has switched to bearish and is respectfully playing along with price swings. Current price action shows price is struggling at the confluence (131.550) and we are beginning to see some bearish candlestick patterns congest the area. Traders can look out for confirmations around this zone to ride along with the current trend.

Intraday Price levels:
Resistance: 131.550
Support: 127.300
Chart pattern: Wedge pattern identified on a 4hour time frame