In a recent development, USD/JPY has broken below key August 5 lows, hinting at a possible shift in the long-term trend. While the move lacks momentum, there are indications that it may not sustain before a potential pullback.
USD/JPY Daily Chart Analysis
Technical analysis reveals that USD/JPY has broken a major multi-year trendline, signaling a potential reversal of the long-term uptrend. The breach below the August 5 lows further supports this reversal. According to market theory, “the trend is your friend,” and such a break increases the likelihood of continued downside movement.
However, strong support is anticipated at 140.25 (December 2023 low), which could temporarily halt the pair’s descent. A further break below this level would provide additional confirmation of the trend reversal, potentially leading to a target of 137.24 (July 2023 low).
Notably, USD/JPY is exhibiting bullish convergence between price action and the Relative Strength Index (RSI). Despite reaching a lower low, the RSI has not entered oversold territory, indicating a lack of bearish conviction and suggesting a possible rebound.
Analysis Breakdown:
USD/JPY has broken below key support levels, indicating a potential reversal in the long-term trend. While the move lacks momentum, technical analysis suggests a shift in market sentiment. Strong support at 140.25 may slow the pair’s descent, but a break below this level could confirm a trend reversal with a downside target of 137.24. The bullish convergence between price action and RSI signals a potential rebound in the near future. Traders and investors should closely monitor these developments to make informed decisions regarding their positions in the USD/JPY market.