By Areena Fx- USD/JPY has fallen to a key low – if it breaks and closes below it could threaten the uptrend.
- Such a move would probably turn the odds more in favor of bears.
USD/JPY is testing support at key lows from where it bottomed and pulled back during August. If price breaks back below these lows it could risk signaling a reversal of the long-term uptrend, and suggest a major bearish shift in the technical outlook for the pair.
USD/JPY Daily Chart
The pair has already broken below a major multi-year trendline, suggesting the long-term uptrend has been undermined. However, to confirm a reversal, price would have to break and close (on a daily or preferably weekly basis) below the August 5 low at 141.69.
Strong support comes in at 140.25 (December 2023 low) and this could slow the pair’s descent. A break below that level too, would provide even more confirmatory evidence of a reversal in the trend.
Given it is a principle of technical analysis theory that “the trend is your friend” , establishing the direction of the trend helps forecast where price is most likely to go next, so such a breakdown would increase the odds of more downside evolving in the future.