Title: USD/JPY Technical Analysis: Consolidation Persists as Pair Eyes Key Ascending Support at 145.50
Original Author: Kelvin Wong, MarketPulse
The USD/JPY currency pair remains in a consolidation phase, caught within a medium-term bullish trend that has been developing since the start of 2023. The analysis provided by Kelvin Wong of MarketPulse highlights pivotal technical levels that traders are watching, particularly the ascending channel support near the 145.50 level. With a mixed bag of macroeconomic fundamentals and central bank divergences in play, the technical outlook provides clarity for market participants anticipating the next move in this heavily traded currency pair.
This article explores the nuances behind the USD/JPY price behavior, breaking down the major technical indicators, support and resistance levels, potential breakout scenarios, and the macroeconomic context that could influence future price action.
Current Market Behavior
USD/JPY has exhibited a sideways trading pattern in recent weeks after a steep rally that began in January 2023. The pair’s bullish trend has moderated, but shows no clear sign of reversal as of yet. The recent failure to break above the key resistance around the 151.90 level suggests reduced momentum on the upside, although downside risks appear modest, so long as price action remains above ascending trendline support.
Highlights of Recent Price Action:
– The currency pair peaked around 151.90 in November 2023
– Since peaking, price action has formed a consolidation pattern, with lower highs and stable support
– The lower boundary of this consolidation coincides with an ascending channel trendline originating in early 2023, now near the 145.50 mark
– Market participants are closely monitoring this level as a key barometer of trend continuation or breakdown
Technical Overview and Chart Patterns
An analysis of the USD/JPY daily chart shows important technical developments. The broader trend is bullish, but consolidation suggests a possible inflection point. Technical indicators currently present a neutral-to-bearish short-term bias within a long-term bullish structure.
Key observations:
– The price is oscillating within a rising channel, suggesting that the broader upward trend remains intact
– There has been a series of lower highs since early November 2023, capping bullish momentum
– A critical support zone lies just below the current trading range, near 145.50
– A breakdown below this level could signify a change in the medium-term trend
Support and Resistance Levels
Effective trading requires precise identification of support and resistance levels. In the current technical layout, these levels serve as markers for potential breakout or pullback scenarios.
Support Levels:
– 145.50: This is the ascending range support derived from the rising trendline dating back to January 2023. It has been tested multiple times, reinforcing its significance
– 144.30: A minor horizontal support zone, just below the trendline. A breach could trigger further declines
– 141.50: A deeper support level that aligns with previous price reactions, acting as a second line of defense if 145.50 fails
Resistance Levels:
– 149.80: Minor resistance established in mid-November 2023
– 151.90: Major resistance corresponding to the multi-decade high observed in October 2022. This level has once again proven to be strong resistance following tests in 2023
– A sustained break above 151.90 could open the door to fresh bullish momentum
Technical Indicators Analysis
Several oscillators and momentum tools suggest that the USD/JPY pair may remain range-bound for the time being, with limited directional conviction. Traders should watch for divergence or confirmation signals from these indicators.
Key indicators:
– RSI (Relative Strength Index): The RSI is currently neutral, hovering around the 45–50 range. There is no clear overbought or oversold condition, consistent with the consolidative price action
– MACD (Moving Average Convergence Divergence): The MACD line is slightly
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