USD/JPY has been rallying higher since it reversed at the December 2023 low on September 16. It has established a sequence of higher highs and higher lows and could be said to be in a short-term uptrend. USD/JPY 4-hour Chart (Click on image to enlarge)Given it is a principle of technical that “the trend is your friend” the odds favor a continuation higher. On Tuesday, however, price broke out of the rising channel, indicating weakness and that the established uptrend might be faltering. On its own, however, it is not sufficient to indicate a complete reversal lower. The overall bias in the short-term is still mildly bullish, however it would now take a close above 144.68 (September 24 high) to provide stronger confirmation of more upside. Tentative targets then lie at 145.00, then 145.50 and finally in a bullish case 146.00. The Relative Strength Index (RSI) is showing bearish divergence with price (red dashed line on chart above). Although price was not lower on the September 24 lows compared to the September 20 lows, the RSI was lower, indicating strong downside momentum in the recent sell-off. This could be a sign of underlying weakness.The pair is in a medium-term downtrend suggesting a risk of a resumption lower, however, those risks are balanced by the fact that it is in a long-term uptrend.More By This Author:US Dollar Soft After Consumer Confidence Figures, Eyes On Fed Speakers US Dollar Sees Some Light Ahead Of The Weekend AUD/USD Price Forecast: Continues Posting Green Candlesticks As It Pushes Higher
USD/JPY Price Forecast: Breaks Below Rising Channel, Weakening The Uptrend
