[USD/JPY Shock] 145 Yen Break Imminent!? Is a Major Downtrend About to Begin?

USD/JPY Technical Analysis – Falling Below Mid-145 Yen Level, Strengthening Signs of a Continued Downtrend

Overview (May 16, 2025)

USD/JPY is currently trading around 145.38, clearly moving below the important support zone at 145.50. A comprehensive analysis of candlestick patterns, moving averages, and technical indicators such as ADX and DMI reveals that the market continues to favor "sell on rallies." Selling pressure among market participants shows no signs of easing, making the scenario of a drop below 145.00 increasingly plausible.

Key Point 1: Price Action Below Major Moving Averages

The chart shows that the price is positioned below both the 50-hour moving average (blue) and the 200-hour moving average (red), with both MAs sloping downward. This indicates a bearish trend in the short to medium term. Notably, the 50MA is acting as a strong resistance line during the downtrend. Even in the event of a rebound, lower highs continue to form, making it a difficult phase for buyers.

Key Point 2: Trend Continuation Signals from ADX and DMI

The ADX (yellow line), which measures trend strength, is currently hovering around 0.15–0.17, suggesting an early stage of trend formation or a temporary adjustment phase. Looking at the DMI structure, the –DI (red line) remains above the +DI (green line), indicating a strong selling bias. As long as this structure persists, the market is likely to consider it an opportune time for initiating sell positions. If the ADX rises above 0.20, a clearer downtrend may materialize.

Key Point 3: Volume Fluctuations Indicating Increased Selling Demand

Although there is no dramatic surge in overall volume, trading activity becomes noticeably active during the breach below 145.50. This indicates that technical-level selling strategies are functioning effectively. Should volume increase in tandem with a clear break below 145.00, the downward momentum could accelerate. When price and volume move in alignment, trend reliability improves—serving as additional support for selling strategies.

※Image Source: cTrader platform

Outlook and Trading Strategy

The USD/JPY market requires close monitoring of the following key levels and technical conditions to assess potential scenarios ahead.

• Break of 145.00 Support: A clear drop below this level could open up targets at 144.50 and the psychological level of 144.00.
• Sell-on-Rally Zone Around 146.00–146.30: Even if a short-term rebound occurs, this zone continues to face strong selling pressure.
• ADX Movement: If ADX exceeds 0.20, it may confirm the formation of a clear downtrend, making short strategies more favorable.

Example Trade Scenarios

Bearish Scenario (Short Strategy)
Entry: Enter short after confirming a clear break below 145.00
Take Profit Target: 144.50–144.00
Stop Loss: Just above 146.00 (beyond rebound high)

Bullish Scenario (Short-Term Long)
Entry: Enter long after confirming a bullish wick bounce just above 145.00
Take Profit Target: 145.80–146.00 (near 50MA)
Stop Loss: Below 144.80 (if support fails)

Conclusion:

Technically, USD/JPY is in a "sell-on-rally dominant" phase, supported by moving averages, DMI structure, ADX trends, and volume changes. The 145.00 level is a pivotal threshold, drawing significant market attention. Traders should aim to align with the prevailing trend and maintain disciplined risk management across price zones.

Disclaimer:

This article is intended for informational purposes only and does not constitute investment advice for any currency pair. Final investment decisions should be made at your own discretion.
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