Market Overview for POL/Yen (POLJPY): Rally and Consolidation Amid Volatility

• • POLJPY experienced a sharp rally followed by consolidation, breaking above key resistance.
• • Momentum indicators show bullish divergence with RSI near overbought, hinting at possible pullback.
• • Volatility expanded during the rally but has since decreased, suggesting short-term uncertainty.
• • Bollinger Bands show recent reversion to the mean, with price near the upper band at 43.18.
• • Volume surged during the rally but declined in the final hours, signaling weakening conviction.

At 12:00 ET–1 on 2025-09-04, POLJPY opened at 41.54 and reached an intraday high of 43.18. The pair closed at 42.31 at 12:00 ET on 2025-09-05. Total volume for the 24-hour window was 193,323.8 with a notional turnover of approximately 8,179,645.2 Yen.

Structure & Formations

POLJPY displayed a strong bullish breakout around 02:30 ET as it rose to 42.55, followed by a consolidation phase marked by a bearish harami pattern at 04:00 and a doji at 04:15. The 43.18 level acted as a resistance before the price retracted. A key support zone formed between 42.08 and 42.17 following a series of rejection candles, indicating strong buying pressure.

Backtest Hypothesis

The backtest strategy involves entering a long position when a bullish engulfing pattern occurs near the 20-period moving average and RSI falls below 40, followed by a stop-loss at the nearest support level and a take-profit at the 38.2% Fibonacci retracement of the recent bullish swing. This setup is best executed during periods of high volatility, such as the one observed today, as it allows for capturing momentum while managing risk. This approach could have captured the rally beginning at 02:30 ET, with a stop below 42.17 and a target near 42.49.

Moving Averages and MACD

The 15-minute chart shows the price closing above the 50-period moving average, with the 20-period line acting as dynamic support. The MACD histogram turned negative after a positive divergence at 05:00, suggesting a weakening of upward momentum. While the crossover is bullish, caution is warranted as the histogram shows decreasing intensity.

RSI and Bollinger Bands

RSI reached 73 near 03:00, entering overbought territory, but failed to retrace significantly, indicating strong buying pressure. Bollinger Bands expanded during the rally, with price peaking near the upper band at 43.18. The current reversion to the middle band suggests the market is testing whether the bullish trend is sustainable.

Volume and Turnover

Volume spiked during the rally, reaching a high of 33,997.9 Yen at 02:30, followed by a sharp decline, indicating reduced conviction. Notional turnover mirrored this pattern, with the highest turnover occurring at the same time. A divergence between rising price and falling turnover suggests that the rally may face a near-term correction.

Fibonacci Retracements

Applying Fibonacci to the recent bullish swing from 41.20 to 43.18, key levels include 38.2% at 42.39 and 61.8% at 41.86. The 42.39 level was tested at 09:15 and 15:30, with price bouncing off and retreating to the 42.23 level. The 42.23 to 42.49 range is now critical to observe for the next 24 hours.

Given the current consolidation, POLJPY may retest the 42.23 level before attempting another push higher. Traders should remain cautious as overbought RSI and diverging volume could trigger a short-term pullback. A break below 42.17 would signal a shift in sentiment, while a retest of 43.18 could confirm bullish momentum.