Bears Overextended at Key Support - Bulls CoilUSD/JPYOANDA:USDJPYjacesabr_real📊 **To view my confluences and linework:** Step 1️⃣: Grab the chart Step 2️⃣: Unhide Group 1 in the object tree Step 3️⃣: Hide and unhide specific confluences one by one 💡 **Pro tip:** Double-click the screen to reveal RSI, MFI, CVD, and OBV indicators alongside divergence markings! 🎯 Title: 🎯 USDJPY: Bears Overextended at Key Support - Bulls Coil The Market Participant Battle: Bears have pushed USDJPY aggressively lower from the 150.00 psychological level down to the critical 146.60-147.00 support zone, exhausting their momentum in the process. This relentless selling pressure has created a classic trap scenario: sellers drove price through multiple supports, but failed to achieve follow-through below 146.60, while buyers absorbed this volume at a critical technical level. The evidence shows bulls quietly building strength at this multi-tested support zone (marked as point 2 in the analysis), with price now closing above the 147.00 handle - a clear sign that buyers have seized control from overextended sellers. We expect a return move to 148.40-149.00 as profit-taking forces bears to cover and fresh bulls enter at this value zone. The battle has shifted: sellers got their move, but couldn't capitalize. Now it's the bulls' turn to strike back from this coiled spring position. Confluences: Confluence 1: Bull Trap Spring Pattern (2H Chart - Anti-Butterfly + Double Bottom) The 2-hour chart reveals a textbook spring pattern where price action at point 3 (near 150.00) marked the exhaustion high, followed by aggressive selling that brought us down to point 2 (146.60 area). However, this wasn't weakness - it was a shakeout. Price then closed decisively above point 1's level (approximately 148.00), confirming that the selloff was absorbed by institutional buying. The "Anti-Butterfly" harmonic pattern visible on the chart suggests a bullish reversal setup, while the double bottom structure at 146.60 has now printed a clear higher low at point 4. This structure screams one thing: bears are trapped, and the spring is loaded. The fact that we're seeing bullish candle reactions at point 4 with price attempting to close above the neckline zone (147.20-147.50) validates the setup. Entry trigger confirmed when price closed above 147.00. Confluence 2: Bullish Divergence Trifecta (8H Chart - RSI, MFI, CVD) The 8-hour chart provides the smoking gun for this bullish setup. From point 2 to point 4, we witness a textbook higher low in price structure, but here's where it gets interesting: RSI shows a lower low, MFI shows a lower low, and CVD Candles display a lower low - creating a triple bullish divergence. This is a powerful signal that selling pressure is evaporating despite price making a similar low. Both RSI and MFI are deeply oversold at these levels, historically a high-probability reversal zone for USDJPY. The divergence tells us that each successive test of support is weaker than the last, meaning bears are running out of ammunition. Additionally, the most recent large green candle that shows negative delta is concerning at first glance, but it's actually a sign of absorption - institutional players are taking the opposite side of retail sellers. More importantly, the most recent red candle with large activity shows bullish delta, meaning buyers are stepping in aggressively even on down candles. This absorption pattern is classic institutional accumulation behavior. Confluence 3: Anchored VWAP Institutional Footprint (8H Chart) Anchored VWAP from point 1 (148.00 area) provides critical institutional context. Price dropped below the first standard deviation of the AVWAP, reaching an extreme discount level where institutional buyers historically accumulate positions. The key signal: price closed back above the first deviation after the pierce, indicating that smart money stepped in to defend this level. This isn't retail behavior - retail panics at these drops. Institutions methodically accumulate. The price action suggests a completed shake-out below VWAP followed by immediate reclamation, a pattern that typically precedes strong upward moves as institutions defend their average entry price. The AVWAP continues to provide dynamic support, and the successful retest validates the bullish thesis. Confluence 4: Schiff Pitchfork + Fibonacci Confluence (Multiple Timeframes) The Schiff Pitchfork anchored from the swing structure perfectly catches point 4 at the median line - a high-probability reversal zone within the pitchfork structure. This isn't coincidence; it's market geometry playing out. Additionally, the Fibonacci extension from points 2→3 shows that price pierced below the 0.705 level for three consecutive candles but couldn't close below it. This failure to break through Fibonacci support, combined with price now attempting to move above the 0.62 retracement, suggests the correction has run its course. The confluence of pitchfork median line + Fibonacci support + horizontal structure creates a triple-layered support zone that has proven too strong for bears to crack. The geometry is screaming "bottom is in." Confluence 5: OBV Bollinger Band Extreme (Technical Indicator) On-Balance Volume (OBV) shows price has pierced and is trading below the lower Bollinger Band line - a statistically rare event that strongly hints at an imminent reversal. In the OBV indicator panel, price is also below the Bollinger Band lower line, creating a double extreme reading. Bollinger Band extremes are mean-reversion setups by nature, and when both price and OBV are at extremes simultaneously, the probability of a bounce increases significantly. This technical setup has a strong historical track record on USDJPY, particularly when combined with oversold momentum indicators. The bands are likely to contract soon, and price should snap back toward the mean. Web Research Findings: - **Technical Analysis:** Current technical consensus on USDJPY is mixed to bearish in the very short term, with Investing.com showing "Strong Sell" signals on hourly and daily timeframes. However, key support is identified at 146.60-147.50, with multiple analysts noting that this zone has held firm. Resistance is seen at 148.00-148.80, then 149.00. The broader technical picture shows USDJPY still in a long-term uptrend supported by the 50-week SMA, with the current pullback viewed as a corrective phase within the larger bullish structure. Several TradingView analysts are calling for bounces from the 147.00-147.50 support zone with targets at 148.80-150.00. - **Recent News/Earnings:** The Bank of Japan held its most recent policy meeting on September 19, 2025, keeping interest rates unchanged at 0.5% as widely expected. Governor Ueda signaled the BoJ would continue to raise rates gradually if economic conditions warrant, but emphasized patience given Japan's political uncertainty. The BoJ also announced a very gradual plan to reduce ETF holdings over the next 100+ years, which has minimal near-term market impact. On the US side, recent ADP private payroll data showed a 32K decline in September employment, increasing expectations for Fed rate cuts. The Fed delivered a 25bp cut as expected, with markets now pricing an 86% probability of another cut in December. This interest rate differential dynamic (Fed cutting while BoJ eventually hikes) is a key medium-term driver for potential yen strength. - **Analyst Sentiment:** Analyst opinion is divided but not overwhelmingly bearish. Approximately 50-60% of recent technical commentary leans bearish for the very short term, citing downside momentum and break of key levels. However, many analysts acknowledge that the 146.60-147.50 support zone is critical and holding, with several calling for bounces from this level. Long-term forecasts remain constructive on the dollar, with projections suggesting USDJPY could reach 149-151 by end of October 2025. The divergence in views creates a contrarian opportunity - when consensus is mildly bearish but support holds, it often signals a bottom is forming. - **Data Releases & Economic Calendar:** No major high-impact events are scheduled for USDJPY within the next 24-48 hours. The next BoJ meeting is not until late October 2025. US economic data this week includes labor market reports which could influence Fed rate cut expectations. The next significant catalyst would be October's BoJ meeting where markets are pricing approximately 39% probability of a 25bp rate hike. Japanese manufacturing sentiment improved to the highest level since late 2024, which has supported the yen recently. - **Interest Rate Impact:** The interest rate differential between the US and Japan remains the dominant medium-term driver for USDJPY. With the Fed expected to deliver approximately 50bps of additional cuts before year-end (on top of the recent 25bp cut) and the BoJ potentially hiking 25bp in October or December, the carry trade appeal of USDJPY is diminishing. This fundamental backdrop suggests medium-term headwinds for aggressive USDJPY bulls, but creates opportunities for tactical bounces as the pair adjusts to the new rate environment. The technical oversold condition combined with rate differential repricing creates an interesting setup for a counter-trend bounce. Layman's Summary: In simple terms, here's what's happening: The US Dollar has been falling against the Japanese Yen because traders expect US interest rates to keep dropping while Japan's rates might go up. This has pushed USDJPY down to a very important support level around 146.60-147.00. However, several things suggest the selling has gone too far and we're due for a bounce. First, technical indicators are showing "oversold" readings - like a rubber band stretched too far that wants to snap back. Second, big institutional traders appear to be buying at these low levels based on volume patterns. Third, the price tried to break below key support levels multiple times but couldn't hold below them - this is called a "failed breakdown" and often leads to sharp reversals. For this specific trade, the technical setup looks good for a bounce to 148.40-149.00 in the short term. The main risks are: (1) if the dollar keeps weakening dramatically, (2) if Japan unexpectedly hikes rates sooner than expected, or (3) if we break below 146.60 support on a closing basis. The risk/reward looks favorable for a quick tactical long play given how oversold we are, but this isn't a "buy and hold forever" setup - it's a bounce play in a market that has medium-term headwinds. Machine Derived Information: - **Image 1 (2H Chart - Pattern Overview):** Shows Anti-Butterfly pattern and Double Bottom formation with price breaking above consolidation zone. - **Significance:** Confirms bullish reversal structure with point 3 as exhaustion high, point 2/4 as double bottom support, and successful breakout above neckline. This is a textbook spring pattern where bears trapped themselves. - **AGREES ✔** - **Image 2 (8H Chart - Trend Context):** Displays broader downtrend from 150.00 with uptrend rejection followed by sharp decline to support zone. Shows trend strength indicator confirming downtrend but approaching potential reversal zone. - **Significance:** Provides context that we're in a downtrend attempting to reverse, which means we're catching a falling knife. However, the trend indicators show weakening downside momentum, suggesting the trend may be exhausting. - **PARTIALLY AGREES ⚠️** (Confirms we're counter-trend but shows exhaustion signals) - **Image 3 (8H Zoomed - V-Shaped Recovery Setup):** Closeup view of the V-shaped potential reversal from point 2 to point 4, showing the spring compression phase. - **Significance:** The tight compression and bullish candle reaction at point 4 suggests strong buying interest. This V-shape pattern often precedes violent reversals when combined with oversold conditions. - **AGREES ✔** - **Image 4 (8H Chart - Divergence Analysis with Indicators):** Shows RSI, MFI, CVD, and OBV panels with clear bullish divergences marked. RSI and MFI both show lower lows while price makes higher low. - **Significance:** Triple divergence (RSI + MFI + CVD) is one of the strongest reversal signals in technical analysis. The divergence confirms that selling pressure is diminishing despite similar price levels. Critical confluence for the bullish thesis. - **STRONGLY AGREES ✔✔** - **Image 5 (8H Chart - Bollinger Band Analysis):** Displays Bollinger Bands with moving average overlays showing price action relative to the bands. Point 2 and 4 marked as potential reversal zones. - **Significance:** Price is at the lower extreme of the Bollinger Band structure, a mean-reversion setup. The bands should contract and price should return toward the middle band (around 148.50). - **AGREES ✔** - **Image 6 (Same as Image 5):** Duplicate of Image 5 showing Bollinger Band context. - **Significance:** Reinforces the mean-reversion opportunity from oversold Bollinger Band extremes. - **AGREES ✔** - **Image 7 (8H Chart - Pitchfork Geometry):** Shows Schiff Pitchfork with median line catching point 4 perfectly, demonstrating market geometry at work. - **Significance:** The pitchfork median line is a high-probability reversal zone. Price respecting this geometry suggests the structure is valid and the bounce should continue toward the upper parallel channel line. - **AGREES ✔** - **Image 8 (8H Chart - Fibonacci + Support/Resistance Levels):** Displays horizontal support levels at 146.60 and resistance zones with Fibonacci extensions showing 0.62 and 0.705 levels. - **Significance:** The multiple failed attempts to close below Fibonacci 0.705 support, combined with horizontal structure support at 146.60, creates a high-conviction support zone. Price now attempting to reclaim 0.62 Fibonacci level is bullish. - **AGREES ✔** Actionable Machine Summary: The machine-derived analysis from the chart images paints a compelling bullish picture: We have a confirmed spring pattern where bears exhausted themselves at a critical support zone (146.60-147.00), creating a textbook bull trap scenario. The triple bullish divergence (RSI, MFI, CVD) provides high-conviction evidence that selling pressure has evaporated, while the Bollinger Band extremes suggest a mean-reversion bounce is imminent. The Schiff Pitchfork geometry and Fibonacci confluence add structural support to the reversal thesis. The only caution flag is that we're trading counter to the prevailing short-term downtrend, meaning this is a reversal play rather than a trend-following setup. However, the exhaustion signals are strong enough to justify the counter-trend position. **For trade execution:** Look for entries near current levels (147.00-147.20) with stops below 146.60 on a closing basis. First target is 148.40-148.80 (resistance zone), second target is 149.20-149.50 (prior consolidation area). This is a tactical bounce play with a favorable risk/reward of approximately 2:1 to first target and 3:1 to second target. Consider taking partial profits at first target and trailing stops thereafter. **Time horizon:** 3-7 days for targets to materialize based on 8H timeframe setup. Conclusion: **Trade Prediction: SUCCESS** ✅ **Confidence: MEDIUM-HIGH** **Key Reasons for Success:** 1. **Triple Bullish Divergence:** RSI, MFI, and CVD all showing bullish divergence between points 2→4 is one of the most reliable reversal signals in technical analysis. This indicates sellers are losing control despite similar price levels. 2. **Critical Support Zone Holding:** The 146.60-147.50 support zone has held firm across multiple timeframes and test attempts. Failed breakdowns below key support often lead to sharp reversals as trapped sellers cover positions. 3. **Institutional Accumulation Evidence:** The Anchored VWAP analysis shows smart money stepped in below first standard deviation and defended the level. Combined with the bullish delta on red candles, this suggests institutions are accumulating positions at value levels. 4. **Oversold Extremes Across Multiple Indicators:** RSI, MFI, OBV Bollinger Bands all showing oversold readings simultaneously. Mean reversion probability is high from these extreme conditions. 5. **Geometric Confluence:** Schiff Pitchfork median line + Fibonacci support + horizontal structure creating a triple-layer support zone that has proven too strong for bears to crack. Market geometry is perfectly aligned for a reversal. **Key Risks/Reasons to Manage Carefully:** 1. **Counter-Trend Play:** We're buying into a prevailing short-term downtrend, which inherently carries more risk than trend-following setups. If downward momentum resumes aggressively, we could see follow-through below 146.60. 2. **Mixed Delta Signals:** The recent large green candle with negative delta is somewhat concerning, though it can be interpreted as absorption. This creates some uncertainty about the conviction of the buying. 3. **Medium-Term Fundamental Headwinds:** With Fed cutting rates and BoJ potentially hiking, the fundamental interest rate differential story is negative for USDJPY over the next 3-6 months. This is a tactical bounce play, not a long-term structural trade. 4. **Short-Term Technical Consensus Bearish:** Approximately 50-60% of technical analysts and automated indicators are showing bearish signals for the very short term. If we're wrong about the reversal, the consensus trade is still down. 5. **Tight Stop Loss Required:** To maintain favorable risk/reward, the stop loss must be placed just below 146.60, which is relatively tight (60-70 pips from entry). A spike below this level would stop us out even if the longer-term reversal thesis is correct. **Risk/Reward Assessment:** The risk/reward on this trade is **favorable at approximately 2:1 to first target (148.40-148.80) and 3:1 to second target (149.20-149.50)**. With entry around 147.00-147.20, stop loss at 146.55 (45-65 pips risk), first target at 148.50 (130-145 pips reward), and second target at 149.30 (210-225 pips reward), the mathematics justify the trade. The confluence of multiple technical factors supporting the bullish case tips the scales in favor of attempting this counter-trend reversal. **Final Recommendation: TAKE THE TRADE WITH REDUCED SIZE** 💰 This setup has enough technical merit to warrant a position, but the counter-trend nature and mixed short-term sentiment suggest using 50-70% of normal position size rather than a full-size allocation. The technical confluences are strong, the support zone has held firm, and the risk/reward is favorable. However, respect the stop loss religiously - if we close below 146.60, the reversal thesis is invalidated and deeper losses could follow. Consider scaling in: Enter 40% of position at current levels (147.00-147.20), add another 30% on a break and retest of 147.50, keeping 30% dry powder. Take 50% profit at first target (148.50), move stop to breakeven, and let the remainder run toward 149.30 with a trailing stop. This is a tactical swing trade with a 3-7 day time horizon - not a position trade. Monitor price action closely, especially around the 148.00 resistance level, as this could determine whether the bounce gains momentum or fails. **Risk Management Imperative:** If USDJPY closes below 146.60 on an 8H candle, exit immediately regardless of loss. If we see major USD weakness (like a surprise hawkish BoJ announcement or dramatic Fed dovishness), exit even if stop loss isn't hit - the fundamental story would change. Honor your risk parameters and remember: surviving to trade another day is more important than any single trade.