Title: USD/JPY Technical Analysis: Bearish Sentiment Dominates as Sellers Hold Control
By InvestingLive Analysts
Original author: InvestingLive Editorial Team
Source: https://investinglive.com/technical-analysis/usdjpy-technical-analysis-seller-in-the-usdjpy-stay-in-control-heres-why-20250804
The USD/JPY pair continues to exhibit downside pressure as sellers remain firmly in control of the price action. A combination of weakening bullish momentum, unfavorable technical patterns, and broader macroeconomic influences are setting the stage for potential further weakness in the near term. This article explores the technical setup behind this bearish trend and outlines the key levels that traders should watch.
Technical Overview
The USD/JPY pair closed the previous trading session with a bearish tone and continues to display lower highs and lower lows on key timeframes.
– The daily chart indicates the presence of a descending channel, which has successfully guided the price for the past several weeks.
– Momentum indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), signal weakening bullish momentum.
– Price remains below the 20-day Exponential Moving Average (EMA) and struggles to reclaim the 50-day EMA, reinforcing short-term bearish sentiment.
Daily Chart Analysis
On the daily price chart, the pair’s structure is increasingly tilted toward the downside.
– The 20-day EMA continues to act as dynamic resistance as sellers reject attempts to reclaim this level.
– Bearish candlestick patterns near key resistance zones further affirm that sellers have the upper hand.
– The RSI remains under the neutral 50 mark, telling investors that the momentum is in favor of the bears.
Key Support and Resistance Levels
– Immediate resistance lies near the 146.00 psychological mark, which aligns closely with the 20-day EMA.
– Further upside resistance is expected at 147.00, near the upper boundary of the descending channel.
– On the downside, key support sits near 144.50, which contains the lower end of the descending price channel.
– A break below 144.50 may expose the pair to further losses with potential support around 143.60 and 142.80.
Technical Indicators
Multiple technical indicators suggest that the sellers have not exhausted their strength. Below are some of the key readings:
1. RSI
– The RSI is currently hovering below 50, indicating weak buying activity.
– There is no bullish divergence evident, giving little sign of a near-term reversal.
2. MACD
– The MACD histogram remains below the zero line with negative momentum building.
– Both MACD and signal lines are pointing downward, supporting the bearish narrative.
3. Moving Averages
– The USD/JPY price trades below both its 20-day and 50-day Exponential Moving Averages.
– The 200-day EMA remains higher, around the 145.50 level, offering longer-term support, but is not sufficient to reverse short-term momentum.
Bearish Setup Confirmation
The current alignment of indicators and price action shows a classic bearish setup:
– Lower highs on the daily chart indicate continued pressure from bears who are entering positions on any bullish retracement.
– Volume analysis also signals a lack of buying interest, further amplifying the situation for additional declines.
– The recent failure to maintain a close above the 146.00 level suggests that bulls are struggling to find footing.
Fundamental Context
While this is a technical analysis article, it’s important to highlight some macroeconomic factors reinforcing the technical weakness.
– The U.S. Federal Reserve has taken a more cautious stance in recent months regarding further rate hikes, which has capped any upward thrust in the USD.
– At the same time, recent commentary from the Bank of Japan indicates a firmer stance on controlling inflation, which has led to a relative firming in the Japanese yen.
– This divergence between central bank policies has supported yen-buying interest and added fuel
Explore this further here: USD/JPY trading.