【USD/JPY】1-Hour Chart Analysis｜May 7, 2025

USD/JPY Analysis – Fails to Break 143.50, Signs of Renewed Decline

Overview (May 7, 2025)

USD/JPY is currently trading around 143.16. Despite a temporary rebound in recent hours, the pair remains stuck in a medium-term downtrend. A strong resistance zone has formed between 143.50 and 143.60, where upward attempts have repeatedly been rejected. Technical indicators show that the 200-hour moving average (200MA) is still trending downward, and the 50MA is also declining. These factors are weighing on the price, increasing the risk of a renewed downward break.

Key Point 1: Relationship Between Moving Averages and Candlestick Structure

Chart analysis reveals that the price is trading below both the 200MA (red line) and the 50MA (blue line), forming a typical bearish technical pattern. Notably, multiple upper shadows on candlesticks around the 143.40–143.50 zone suggest strong selling pressure in that area. The occurrence of a death cross between these moving averages also signals the continuation of a medium-term downtrend.

Key Point 2: ADX and DMI Indicate Bearish Momentum

The ADX (yellow line) at the bottom of the chart is gradually rising from the 0.15 range toward 0.20, suggesting a developing trend. While the DMI shows occasional dominance of +DI (green line), directional bias remains mixed. Whether ADX continues rising is key to determining if the trend will persist. If –DI (red line) regains strength, preparations for another downward move are necessary.

Key Point 3: Volume Changes Hint at Potential Reversal

Volume trends also warrant attention. The recent large bearish candle was accompanied by relatively high volume, indicating strong selling pressure. In contrast, volume during upward moves has been declining, suggesting weak buying momentum. If the price breaks below 143.00 with increased volume, it may trigger an acceleration of the decline.

※Image source: cTrader platform

Outlook and Trade Strategy

USD/JPY price movements may pivot around the following key levels:

• Resistance at 143.50: This level has rejected multiple rallies and will require strong buying catalysts to break.
• Psychological support at 143.00: A break below this could lead to further declines toward 142.50 or 142.00.
• ADX movement: A rise above 0.20 would suggest a strengthening trend, useful for trade decisions.

Trade Scenario Examples

Bearish Scenario (Continuation of Downtrend)
Entry: Enter short after confirming a failed rebound near 143.40–143.50
Target: 143.00 → 142.50 → 142.00 (step-by-step)
Stop Loss: Exit above 143.70

Bullish Scenario (Short-Term Long)
Entry: Enter long after confirming support at 143.00
Target: 143.50–143.60 (near 200MA)
Stop Loss: Cut loss below 142.85

Fundamental Insight:

USD/JPY is not only influenced by technicals but also by U.S. interest rate expectations and the Bank of Japan's policy stance. This week, key U.S. data such as employment and CPI are scheduled for release, which could increase market volatility. If rate hike expectations decline, it may lead to USD selling and JPY buying, potentially pushing the pair into the 142 range.

Conclusion:

Technically, USD/JPY is facing resistance from moving averages, with ADX and volume indicating strong downside pressure. 143.50 serves as a clear ceiling, and rebound phases can be viewed as selling opportunities. Traders should watch for breakouts of defined support/resistance levels while managing positions cautiously amid short-term volatility.

Disclaimer:

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. All trading decisions are your own responsibility.
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