--- title: "The path to a US-Japan rally is long and obstructed; the Dow Jones suffers setbacks amid geopolitical variables" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/43258567.md" description: "[Today's FX Market] August 7 Trading Strategy Title: The path for USD/JPY to climb is long and obstructed; Dow Jones suffers as geopolitical variables impact USD/JPY (USD/JPY) – Rebound encounters long-term 'floor', recovery from lows faces significant hurdles On the daily chart, after the violent intervention storm triggered by USD/JPY, it has gradually embarked on a long journey of recovery from the bottom this week. Currently, the exchange rate coincides with the intersection of the 61.8% retracement level at 158.45 from the May-July rally and the support line of the long-term uptrend since April last year. Only by breaking through can the rebound advance further, followed by the January high of 159.45 (halfway point of the uptrend)..." datetime: "2026-08-07T01:40:23.000Z" locales: - [en](https://longbridge.com/en/topics/43258567.md) - [zh-CN](https://longbridge.com/zh-CN/topics/43258567.md) - [zh-HK](https://longbridge.com/zh-HK/topics/43258567.md) author: "[交易员说](https://longbridge.com/en/profiles/25527811.md)" --- # The path to a US-Japan rally is long and obstructed; the Dow Jones suffers setbacks amid geopolitical variables \[Today's FX Market\] August 7 Trading Strategy **Title: USD/JPY Climb Faces Long Obstacles; Dow Jones Set Back by Geopolitical Variables** **USD/JPY – Rebound Hits Long-Term "Base," Recovery Path is Steep and Long** **On the daily chart,** after igniting a storm of intervention, the USD/JPY pair has gradually embarked on a long journey to recover from its lows this week. Currently, the exchange rate encounters a confluence of resistance at the 61.8% Fibonacci retracement level of the May-July rally (158.45) and the base support-turned-resistance line from the long-term uptrend since April last year. A breakout above this level would allow the rebound to advance further. Subsequent resistance levels include the January high of 159.45 (the 50% retracement of the uptrend), the April high, and the mirror image of the July 2 low at 160.55 (the 38.2% Fibonacci retracement level). Regarding indicators, the MACD signal line shows a significant deceleration in its downward speed below the zero axis; the RSI has recovered from oversold territory, indicating that the previous violent sell-off has temporarily paused. **Looking at the 4-hour chart,** the recent trend of the USD/JPY has been extremely fragmented. Last week's intervention shock was like a sudden storm, while this week's recovery shows a cautious, steady pace. However, entering the aforementioned multiple strong resistance zones now creates a sense of "uncertainty about the future." In terms of downside risk, the exchange rate should not break below the dual highs of Q4 last year at 157.57. The price action shows resistance from the long-term uptrend base, with signs of lower swing lows forming. The correction may subsequently probe the December 9 high of last year at 156.90, as well as the May 7 low at 156.00. Indicators show the market's process of repairing the downtrend: the MACD is still striving to rise toward the zero axis; the RSI has reached the strong side of the neutral zone. **Resistance Levels:** 159.45, 160.55, 162.00 **Support Levels:** 157.75, 156.90, 156.00 \* USD/JPY 4-Hour Chart **Crude Oil – Probing Last Week's Lows, Recovery Will Face True Tests** **On the daily chart,** crude oil prices reacted sharply following the latest disclosure by Iranian media regarding stricter-than-expected strait management drafts. More than half of Tuesday's (August 4) bearish gap-down loss has been recovered. However, as noted in the column yesterday, while surpassing the key April prior low of 75.85 and the recent downtrend line remains relatively easy, the true test on the path to counterattack comes from the upper rail of the two-week downtrend above the April volatile low of 79.00 and the intersection with the base of the initial July uptrend. Purely from a chart perspective, holding above this level could mark the first higher low point since the mid-term top in early July. Regarding indicators, the MACD slowdown in downward momentum after breaking below the zero axis; the RSI is rising toward the neutral zone, easing the market's downward 颓势 (decline). **Looking at the 4-hour chart,** crude oil saw a significant overnight recovery, but the normal pattern of descending swing highs and lows has not been broken, with prices entangled around the intraday lows of July 28 and August 3. Meanwhile, signs of indicator bottoming need further confirmation: after the MACD golden cross, there is still a gap before reclaiming the zero axis; the RSI has returned to the neutral zone first. If the selling pressure from these three stubborn resistances is heavy, then losing 75.85 again will be a signal of a weak rebound. If it subsequently breaks the June late-month mirror level of 72.40, the downside will sequentially target the psychological level of 70, the 50% retracement of the long-term uptrend from 2020-2022 at 68.20, and supports such as the July valley. **Resistance Levels:** 79.00, 81.85, 84.80 **Support Levels:** 75.85, 72.40, 70.00 \* Crude H4 Source: FXTM **Gold/USD (XAU/USD) – Consolidating Gains from Long Bullish Candle, Partial Immediate Overbought Conditions Digesting** **On the daily chart,** gold surged and then retreated, trapped intraday by strong US dollar sentiment and renewed geopolitical risks. However, looking at the trend, after pulling out a long bullish candle mid-week, gold did not experience 剧烈动荡 (violent turbulence), and the gains from the bullish candle were almost fully retained. Nevertheless, upward movement urgently needs to stabilize above the mirror image of the December 1 high/December 31 low last year at 4270 to continue the counterattack rhythm. Subsequent resistance focuses on the mirror image of the May low/June mid-month high at 4360 up to the February 2 volatile low of 4400. There is also a strong resistance zone above the 4500 barrier. Regarding indicators, the MACD fast line reclaimed the zero axis first; the RSI flattened below the overbought line, signaling a strengthening trend. **Looking at the 4-hour chart,** spot gold spent an entire month building a converging triangle at low levels, with the stage bottom being thoroughly consolidated. Overnight surge saw a slight pullback, not yet reaching multiple supports below: the June mid-late month mirror level of 4215 along with the July high, and the dense low region of December last year at 4165 are expected to become solid backing for the market to expand the rebound. But if all are broken, this round of recovery cannot sustain the attack wave pattern. If the June late-month high/low mirror at 4100 (center of the low box) is lost again, prices will sink toward the 4000 barrier. Regarding indicators, the MACD is approaching a death cross above the zero axis; the RSI flattened after breaking below the overbought line, indicating the bulls' offensive has entered a consolidation phase. **Resistance Levels:** 4270, 4345, 4400 **Support Levels:** 4215, 4165, 4100 \* XAUUSD H4 Source: FXTM **Dow Jones Industrial Average (US30) – Momentum of Consecutive New Highs Interrupted, Indicators Create Divergence Risks** **On the daily chart,** renewed Middle East geopolitical risks and emerging inflation pressures have made investors cautious ahead of tonight's non-farm payroll data release. The Dow Jones had the largest decline among the three major indices overnight, also interrupting the momentum of closing at historical new highs for three consecutive days. Price-wise, before challenging the 55,000 barrier, the market got entangled around the inverse 1.618 extension level of the post-February Iran war outbreak downtrend at 54,075. Indicator status warrants vigilance: although the uptrend since late April is still extending, neither the MACD nor the RSI has created new swing highs alongside the index, and the latter shows signs of turning downward below the overbought line. Potential drawdowns can watch for support at the July early-month high down to the 53,000 level (close to the 1.618 extension level of the Oct 2023-Nov 2024 uptrend). If this ideal bounce point is missed, subsequent battles between bulls and bears will intensify around the June 17 swing high of 52,280 and the lower rail of the aforementioned uptrend; a breakdown means the current medium-term uptrend has come to an end. **Resistance Levels:** 54,075, 55,000 **Support Levels:** 53,000, 52,280, 51,300 \* US30 D1 Source: FXTM **EUR/USD – Horizontal Accumulation After Rally, Beware of Pressure from High Point Connection Line** **On the daily chart,** repeated shifts in geopolitical situations and Fed policy expectations caused volatile performance for EUR/USD this week, with the exchange rate stuck at resistance near the October mid-last-year low of 1.1540 and the January low node of 1.1575 this year. Overall trend-wise, after breaking the downtrend starting from mid-May and rallying strongly, the market's narrow-range consolidation shows a positive posture of "refueling in mid-air." The next higher target for the Euro points to the weekly prior high and the June 16 high of 1.1620. Regarding indicators, the MACD signal line continues to chase the fast line and has also crossed above the zero axis; the RSI fluctuates narrowly below the overbought line, generally pointing to a strong market. **Looking at the 4-hour chart,** the upside prospect for EUR/USD seems relatively difficult. First, oscillators show clear divergence: the MACD forms lower highs in a downward "duck mouth" shape above the zero axis; the RSI also reverses after touching the overbought line，疑似 forming a secondary high. More importantly, the exchange rate currently faces pressure from the mid-term downtrend generated by the connection line of the January and April highs. If it cannot break through, and falls below the dual lows of early June at 1.1500, a small double top for the exchange rate will emerge. Subsequent support focuses on the mid-term low node of November last year at 1.1465, down to the dual lows of late March around 1.1442. **Resistance Levels:** 1.1540, 1.1575, 1.1620 **Support Levels:** 1.1500, 1.1465, 1.1442 \* EUR/USD 4-Hour Chart ### Related Stocks - [DDM.US](https://longbridge.com/en/quote/DDM.US.md) - [DIA.US](https://longbridge.com/en/quote/DIA.US.md) - [DOG.US](https://longbridge.com/en/quote/DOG.US.md) - [UDOW.US](https://longbridge.com/en/quote/UDOW.US.md) - [.DJI.US](https://longbridge.com/en/quote/.DJI.US.md) - [SDOW.US](https://longbridge.com/en/quote/SDOW.US.md)