- USD/JPY has fallen to new lows at a key support level.
- The long-term uptrend has likely reversed as the pair continues to make lower lows.
USD/JPY continues to slide and makes a lower low at 140.36 on Friday, bottoming at roughly the same level as the key December 2023 low, where it is expected to find firm support.
USD/JPY 4-hour chart
The break below the August 5 low on September 11 crossed an important threshold for the pair. Together with the break below the multi-year main trendline in early August, it suggests the possibility that the long-term uptrend has reversed. Since it is a tenet of technical analysis that “the trend is your friend,” such a reversal suggests that the overall bias has changed from “bullish” to “bearish.”
If USD/JPY can close daily below the December 2023 low at 140.25, it would provide further confirmatory evidence of a long-term trend reversal. Such a breakout could then see the price drop to the next target at 137.24 (July 2023 low). It should be noted that the short- and medium-term trends are already bearish.
The USD/JPY is showing a slight bullish convergence between the price and the Relative Strength Index (RSI). At the low of September 11, the RSI was in the oversold zone, now, although the price has fallen further, the RSI has not.
This could be a sign that the move lower lacks some bearish conviction and suggests a risk of a pullback developing. However, given the other bearish signs on the chart, such a bounce, if it materializes, is likely to be temporary before the downtrend resumes and takes the pair to fresh lows.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
