Ate above 160 yen. So, buy the dip instead of selling.
Broke above 160 yen. So, buy the pullback instead of selling.
Until the previous week, 160 yen had been a “ceiling that price would bounce off,”
and on August 28 (Friday) it finally broke above.
Since it broke through the ceiling, the outlook was switched from “sell” to “buy.”
―― That is the conclusion of this edition.
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Part 1: What happened and what changed
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▼ The flow up to now (recap)
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End of July: USD/JPY rose to 163.97 (almost 164)
↓
Early August: Japan and the US conducted synchronized intervention, plunging to 155.22
↓
In August: gradually bought back, recovering to around 159
↓
August 28: broke above 160, reaching 160.15
The key point during this entire month was
that many people thought, “since interventions caused the drop, sell at the retracement,”
but that selling ultimately did not work well.
★ It was a month during which the selling side was slowly pushed back.
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▼ The most important way of thinking: The “ceiling” becomes the “floor”
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This is one of the most fundamental and useful concepts in FX.
In technical terms, it is called “support becoming resistance.”
Before breaking through
─────────── 160 yen ＝ Ceiling (Resistance)
↑↑↑ Hit and bounce
Price
After breaking through
Price
↓↓↓ Even if it drops, it can be supported
─────────── 160 yen ＝ Floor (Support)
Why does this happen?
・Those who were selling at 160 yen, when it breaks through, buy back in
→ When it returns to 160 yen, buy orders appear
・Those who missed the chance to buy at 160 wait for it to come back to 160 again
→ Again, buy orders accumulate at 160
★ Therefore the idea becomes “I’ll buy if it drops to 160 yen.”
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Part 2: What is “pullback buying”
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▼ The market moves in steps
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The market does not rise in a straight line.
／
／＼ ／
／＼ ／ ＼
／＼ ／ ＼
／＼ ／ ＼
／ ＼
● ● ●
Buy now Buy again Buy
Rises → small pause → rises → small pause …… repeats.
This small pause (a step down) is the pullback.
That is what “pullback buying” targets.
★ Why not buy at the high?
Because when you buy at a high point, a small pause comes immediately, creating unrealized losses,
and you tend to become scared and cut losses.
Waiting for a step down brings the distance to cut losses closer,
reducing risk.
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