【Dollar/Yen】What’s becoming visible on the long-term chart: a genuine ceiling — Longs at this level are really dangerous
Please look at the long-term chart for USD/JPY.
On the monthly chart, from the 75-yen level to around 160 yen, it has risen over about 10 years. Reaching 160 yen for the third time now. And each time, it has been knocked down at this level.
On the daily chart as well, there have been repeated touches of 160 yen followed by pullbacks. There is no power to break above.
I have been reiterating a downward bias in the medium to long term, and my conviction has only strengthened here.
A real top may be coming soon.
160 yen is not a “wall” but a “ceiling”
Many people think of 160 yen as a “wall.” someday it will be broken through.
But when you look at the long-term chart, 160 yen is a “ceiling.” The market has repeatedly reversed here.
What happened after it touched 160 yen in the past? A large decline. I think it is highly likely the same pattern may recur this time.
Why this time could be a genuine turning point
There are differences from the previous range and this one.
① The Bank of Japan’s policy normalization is near
Next week there will be a BOJ policy rate announcement. It comes amid rising expectations for rate hikes. If a rate hike or a hawkish stance is shown, it could mark a major turning point toward a stronger yen.
② Expectations of US rate cuts
In the US, signs of an economic slowdown are appearing, and expectations for rate cuts are gradually spreading. A narrowing of the US-Japan rate gap would push toward dollar selling and yen buying.
③ The third touch of 160 yen
Technically, if the same level is touched three times and cannot be broken, the next move is likely to be a reversal. This is forming a so-called triple top. If a triple top is completed on the monthly chart, the downside could be substantial.
Longs at this level are really dangerous
I’ve repeated this to the point of exhaustion, but I’ll say it again.
Longs from this level are really dangerous.
・Even if it goes up, it will be knocked back by 160 yen
・If it surpasses 160 yen, intervention will push it back down
・Fundamentals are turning toward yen strength
・It is in a ceiling zone on the monthly chart
The potential gain from a long position is only about 50–100 pips at most. But if the ceiling breaks and it falls, the decline could be 500 pips, 1000 pips, or more.
The risk-reward is completely unfavorable for long positions.
On the other hand, shorts may eventually be at a profitable level
This is a crucial point.
Suppose you short around 159 yen now and it temporarily moves up to 160 yen. The unrealized loss would be at most about 100 pips.
But if the top is confirmed and it starts to fall, it could run to 155 yen, 150 yen, or lower.
In other words, shorting at this level means you could temporarily incur unrealized losses but eventually be saved.
Of course, proper lot sizing is essential. Going all-in on a long and getting kicked out if it rises above 160 yen makes no sense. Use a size you can endure until the 160 yen region, in the lower-to-mid 160s.
Next week’s BOJ policy rate announcement is the key
The BOJ policy rate decision next week could settle this long-range range.
If hawkish (rate hike or hint of one):There would be a strong move toward the yen, the 160 yen ceiling would be confirmed, and a real downtrend could begin.
If dovish (maintain current policy or cautious stance):There could be a temporary dollar-buying move testing 160 yen. However, as noted above, it is unlikely to sustain above 160 yen.
Whichever way it turns, the structure favors shorts over longs.
Summary
・On the monthly chart, 160 yen is a third touch and a potential triple top
・A genuine ceiling formation is expected soon
・Longs at this level have an extremely poor risk-reward
・Shorts at this level may incur temporary unrealized losses but will eventually be saved
・Next week’s BOJ rate decision could become a turning point
・Maintain a short bias with strict lot management
When the ceiling at 160 yen is truly confirmed, the decline will be fast. Your outcome will largely depend on whether you have a position at that time.
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