USD/JPY | After a strong rebound, what to look at as the standard

The dollar-yen pair ended the week after a strong rebound following a decline, with the short-term selling having clearly run its course and buying being dominant.

Looking at this trend alone, there is a considerable possibility of an gap-up start on Monday.

However, one should not hastily conclude that a rebound means a change in trend.

From a higher timeframe, the situation remains unchanged.

On timeframes of four hours or longer, this rebound should be viewed as a retracement within a downtrend.

- Direction of moving averages - relationship between price and MA - angle and speed of the retracement after the decline

Taken together, the market still tends to price in selling into the rally.

Points to watch on Monday

What matters on Monday is not the direction itself, but how far the price retraces and where it stalls.

- If a gap-up start occurs - price action near the recent rebound high - signs that the rebound is shifting from momentum to consolidation

Until these become clearer, there is no need to actively chase.

Stance

At present, the bias is toward selling into the retracement rather than buying on a short-term rebound.

However, there is no need to rush into positions from the outset. Once the market settles and a pattern where sellers regain the upper hand appears, then that is sufficient.

The market is easiest to misjudge right after a rebound.

Now is a phase to calmly determine where the retracement ends rather than trying to forecast the direction.