USDJPY Major Forex Pair

All week, I've been watching the price movements of the USDJPY pair on the daily chart, eager to see the weekly closure. As shown in the screenshot above, Friday's close created a bearish engulfing candle, and the price respected the 0.382 Fibonacci level from the complete move, which stretches from the significant low to the significant high. Furthermore, we should note a supply area to the left that needs to be included in our confluence list.

On the daily time frame, I zoomed in to highlight this level and the supply area. The price is currently making its third touch of the trendline, which was rejected on Friday before the weekend close. I would like to see more price action in the supply zone, which would show on lower time frames and help us identify a reversal pattern to trade back down to the swing low.

Weakness Shown on the 4-Hour Chart

Looking more closely at the 4-hour time frame, I see signs of weakness in the price following the higher high made on Friday. This high created a double top and also produced a divergence on the Money Flow Index (MFI) indicator.

While the price has been moving within an ascending channel, consistently creating higher highs and higher lows, it has now stalled at the supply area. As mentioned, we have a double top and divergence, indicating readiness for a short trade reversal. Before I consider entering a trade, I want to see more price action near the lower trendline without breaking the previous high. If the price breaks that lower trendline, I would enter a short position targeting the most recent swing low.

I will provide an update as more price action develops later in the week, so stay tuned!