[Urgent Analysis] USD/JPY in Trouble… The Truth Behind the Bearish Technical Signal!

USD/JPY Analysis – Weakness Persists Around the 145 Level with Ongoing Selling Pressure

Overview (May 19, 2025)

USD/JPY is currently trading around 145.27, with short-term downward momentum likely to continue. Although a brief rebound was seen following the previous sharp drop, moving averages are acting as strong resistance, keeping the overall market sentiment bearish. In particular, the 145.00–145.30 zone has become a key battleground and could determine the next direction. This article uses a multi-factor analysis incorporating ADX (Average Directional Index), DMI (Directional Movement Index), moving averages, and volume to clarify the current market risks and opportunities.

Key Point 1: Moving Averages Acting as Clear Resistance

The chart shows that the price is trading below both the 50-hour (blue) and 200-hour (red) moving averages, confirming a continuing downtrend. Recently, although the price briefly rebounded to just below 146, it was capped by the 50MA and turned downward again. This indicates that the recent rallies are being perceived as selling opportunities.

In this context, the moving averages are functioning as resistance, forming a structure similar to a "dead cross," a classic pattern where bearish bias tends to persist. As long as the price continues to fail at breaking above, caution and sell-side strategies are warranted.

Key Point 2: ADX and DMI Indicate Emerging Trend

The ADX (yellow line) is currently hovering around 0.15, which suggests a "quiet" phase before a potential trend develops. However, if it starts rising and breaks above 0.20, this could signal the start of a strong trend—likely to the downside.

Meanwhile, the DMI shows -DI (red line) consistently above +DI (green line), indicating that selling pressure remains dominant. The widening gap between these lines highlights increasing bearish strength and suggests that traders are inclined to sell into rallies. While short-term rebounds may occur, the advantage remains with sellers for now.

Key Point 3: Volume Suggests Continued Selling Pressure

Volume trends reveal strong selling momentum during declines. In particular, when the price broke below 145.00, volume spiked, indicating this level is being closely watched by investors. While volume has since decreased slightly, another decisive break below 145.00 could trigger fresh selling activity.

The relationship between price and volume is often considered more reliable than chart patterns alone. A "break with volume" can mark a critical turning point in the market, so traders should always monitor volume fluctuations along with price movements.

※Image Source: cTrader platform

Outlook and Trading Strategy

For USD/JPY, the following technical levels and market psychology points suggest possible short- to mid-term scenarios:

• Support at 145.00: A psychological level. A clear break below could accelerate a decline toward the 144.80–144.50 zone.
• Resistance at 145.60–145.80: Overlaps with moving averages, making it a likely sell zone.
• ADX Trend: A break above 0.20 may confirm trend development and strengthen the downward move.

Example Trade Scenarios

Bearish Scenario (Continued Downtrend)
Entry: After a clear break below 145.00 with rising volume
Target: 144.80–144.50
Stop Loss: Above 145.60

Bullish Scenario (Counter-Trend Rebound)
Entry: Long entry upon rebound and bullish candle confirmation near 145.00
Target: 145.60–145.80 (around the 50MA)
Stop Loss: Below 144.90

Conclusion:

The USD/JPY 1-hour chart maintains a technically bearish structure, with moving averages, ADX, DMI, and volume all pointing to continued downward bias. The 145.00 level remains the key support to watch, and forming trade scenarios around this point is strategically important. Traders should be quick to follow through on a clear break and be cautious when counter-trading potential rebounds.

Disclaimer:

This article is for informational purposes only and does not constitute a recommendation to buy or sell any specific currency or financial product. All trades are at your own risk.
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