USD/JPY continues to fall. Nevertheless, next week I’ll aim for a return to the 156 yen range with a long position

Dollar/Yen continues to face strong downward pressure this week, and the large rebound we expected has not yet arrived. Looking at the daily chart, the trend remains clearly downward, and I do not think it has turned into an uptrend at this point.

Even so, I see more overweight toward long positions than shorts for next week.

What I am aiming for is not the end of the downtrend. It’s a rebound during a decline, from the 153 yen area back up to the 156 yen area.

The downward pressure did not stop this week either

First, please look at the current daily chart.

In the previous article, I was looking at the 153 yen area as a rebound candidate. Even if it briefly breaks lower, I thought there was a possibility of returning again, so I wrote with a long-leaning view.

In reality, there was an attempt to halt the decline around the 153 yen area. However, it did not lead to the large rebound I had hoped for, and even when it pulled back, it continued to be sold again.

Here, I need to be honest.

It was within the rebound candidate range, but the buying power was still weak.

In markets, even when directions align, timing can be early. The possibility of a rebound exists, but that does not mean it will rebound immediately.

The big trend is still down

When you look at the daily chart, prices have been falling from around 160 yen to the 153 yen area, making lower highs. The moving averages are also pointing down, and prices are moving below them, so the overall flow remains bearish.

It's premature to say the bottom is in or that the uptrend will start from here. Even if it retraces back to the 156 yen area, that alone does not signify a reversal out of the downtrend.

The reason I’m considering a long position next week is not because the trend has turned up.

It’s because, after a sharp drop, I believe there is potential for a short-term buyback.

The long-term direction does not have to match the short-term move. Even if the big picture remains down, there are times when a long position is easier to profit from when prices have been oversold.

Still, next week looks favorable for longs

Currently, the dollar/yen has been sold off sharply from around 160 yen in a short period. It has tested the downside around the 153 yen area several times, but overall, it has not collapsed in one sweeping move yet.

Shorts would come after a large move already occurred. If you chase lower from here, there is a high risk of a rapid rebound that could wipe out profits relative to the potential downside.

On the other hand, if you pull the bid up to the 153 yen area and enter after clearly defining a new low, you can limit losses and aim for a rebound range.

I acknowledge that the downward flow is strong. Still, if you are entering new positions from now, the balance of risk and potential reward appears better for longs.

The target is the 156 yen area again

Next week's prospective retracement target is viewed around the 156 yen area.

From the current 153 yen area, that would be about a 3-yen rebound. It may seem large, but the recent dollar/yen ranges are wide on a daily basis, and if buybacks from shorts accumulate, it should be achievable.

However, I do not expect a straight move from 153 yen to 156 yen. First, can we recover the 154 yen range? Then, after handling the 155 yen retracement sells, can we push into the 156 yen area in order?

The 156 yen level is not evidence that an uptrend has begun; it is a level to target as a rebound within the downtrend. If the price action upon reaching it is weak, don’t chase further—secure profits instead.

Instead of praying for how high it will go, decide in advance the initial rebound range you will target.

Next week may see more volatile price action

Next week features several economic policy events in the U.S. and Japan. The FOMC meeting is scheduled for September 15–16, and the Bank of Japan policy decision meeting is planned for September 17–18.

With so many important factors affecting the dollar/yen, even if it rebounds from the 153 yen area, there is a possibility of significant intraday volatility. Even with directional alignment, a position size that is too large can be overwhelmed by temporary counter-moves.

Therefore next week, avoid entering positions with a single shot larger than usual.

・Keep the initial lot small
・Enter in portions while watching for a bottoming at the 153 yen area
・If the 154 yen range clearly recovers, consider continuing the rebound
・Do not chase aggressively around major events

The more a week moves, the more important it is to focus on how to enter to withstand intraday swings rather than trying to guess the exact direction.

Even if it breaks down, don’t abandon the outlook immediately

The 153 yen area has been tested many times, so there is a possibility of a break lower. If stop-loss orders pile up and it dives toward the 152 yen area, be prepared.

However, I am not prepared to abandon the long outlook just because there is a temporary downside break. If after moving lower, the price quickly recovers the 153 yen area, you can target a rebound after shaking out the sellers.

What you should watch is not merely whether a new low occurred.

After pricing trades to a new low, will the price stay there, or will it quickly rebound?

If it breaks lower but comes back, the long scenario remains intact. Conversely, if it rebounds but cannot recover the 153 yen area and remains selling in the low-price zone, then you should temporarily shift your outlook.

When this scenario would break down

Because merely being optimistic is not enough, here are the conditions for being wrong as well.

If the 153 yen area is clearly penetrated and, even if it rebounds, cannot return to the 153 yen area, and on the daily chart it stays in the low price region with all rebounds sold, then the rebound scenario toward the 156 yen area collapses for now.

In that case, don’t cling to a long position. Admit that your initial idea was wrong and wait for the chart to form a new shape.

Continuing to buy just because you think “it should go up soon after a big drop” is not analysis. It’s merely wishful thinking.

Because you are aiming for a long, you should decide in advance where you will cut your losses.

Summary

Dollar/Yen continues to show downward pressure this week, and the large rebound we hoped for has not yet arrived. The daily chart shows a clearly downward overall flow, and I do not see it turning into an uptrend.

Still, I believe next week favors longs more than shorts. I plan to buy back from the already sharply sold 153 yen area and aim for a move back up to the 156 yen area.

However, I will not try to catch the bottom in one shot. I will enter in smaller lots in portions, confirming the 154 yen recovery as I build positions. If a break-down occurs, I will determine continuation based on whether I can return to the 153 yen area.

The big picture is down. Still, the next available profit range is higher.

This is the scenario I am considering for next week in the dollar/yen.

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