Will USD/JPY break above 146 or reverse? A critical turning point ahead

[USD/JPY 1-Hour Chart Analysis] Pullback from 146 Yen Level – Entering a Trend Correction Phase?

Overview (May 9, 2025)

As of May 9, 2025, USD/JPY has pulled back to around 145.50 yen after previously rising close to 146.50 yen. The pair has since lost momentum and appears to be entering a correction phase. On the 1-hour chart, prices are approaching a level where short-term dip-buying tends to occur, although technical indicators suggest the trend may be slowing. This is currently a phase of “bullish trend consolidation”, and the pair is at a key turning point for determining its next direction.

Key Point 1: Trend Structure Indicated by Moving Averages (MA)

The chart shows that the 50-hour MA (blue) and 200-hour MA (red) are both trending upward, confirming a medium-term uptrend. The fact that prices remain above both moving averages is a strong signal of a bullish environment. However, recent price action has failed to make new highs, and downward pressure toward the 50MA is increasing with the appearance of bearish candles. This marks a critical phase to determine whether the move is a dip or a trend reversal.

Key Point 2: ADX and DMI Show Changes in Momentum

In the lower technical panel, the DMI (Directional Movement Index) shows +DI (green) still above −DI (red), indicating bullish momentum remains intact. However, the ADX (yellow line) is declining from its peak, suggesting that trend strength is weakening. Currently near the 0.30 level, ADX previously signaled strong trends during upward movements, but now gives the impression of a cooling-off phase with no clear direction.

Key Point 3: Relationship Between Candlestick Patterns and Volume

Recent candlesticks show a series of small bearish candles following long bullish ones, reflecting “bullish exhaustion” and “profit-taking pressure.” In addition, volume peaked around the 146 yen level and has since declined, which can be interpreted as a pause in new long entries. If volume picks up again during an upward move, the trend may continue. On the other hand, if the price breaks below 145.20, selling pressure may intensify.

※Image Source: cTrader platform

Outlook and Trading Strategy

The following technical levels and indicator movements will be key in determining the next direction of USD/JPY:

• Battle around the 145.20–145.00 zone: This is a critical support area that includes the recent low and 50MA. Holding above it may trigger a rebound, but a clear break could lead to a drop into the 144 yen range.
• Reattempt at breaking above 146.00: If the pair successfully breaks this recent high again, a move toward 146.50–147.00 becomes more likely.
• ADX rebound and recovery: Although momentum has weakened, a rebound in ADX would indicate trend continuation.

Example Trade Scenarios

Bullish Continuation Scenario (Dip Buying)
Entry: Long entry after confirming a rebound near 145.20
Target: 146.00–146.50
Stop Loss: Below 144.90

Bearish Reversal Scenario (Short-Term Sell)
Entry: Short entry on a clear break below 145.00
Target: 144.30–144.00
Stop Loss: Above 145.50

Conclusion:

Technically, USD/JPY remains in a medium- to long-term uptrend, but short-term risks of correction or pullback warrant caution for overly bullish strategies. While moving averages still act as support, ADX and candlestick patterns suggest increasing short-term selling pressure. Traders should closely monitor the 145.00 support level and wait for confirmation of direction before entering new positions.

Disclaimer:

This article is for informational purposes only and does not constitute a recommendation to buy or sell specific financial products. All trading decisions are the responsibility of the individual.
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