USD/JPY Faces Key Test as Rising Wedge Nears Decision Point

What to Know

• USD/JPY is testing long-term resistance near 154.49, forming a potential bearish rising wedge pattern.
• Key resistance: 154.82 — aligns with the 78.6% Fibonacci retracement and upper channel boundary.
• Support zone: 152.96 — a break below could confirm a bearish reversal and shift short-term momentum.
• The 20-day moving average and lower wedge line converge, acting as dynamic support.
• A close above 154.82 would invalidate the bearish setup and signal renewed strength toward higher targets.
• Broader uptrend remains intact within a rising channel, but momentum shows early signs of slowing.

Rising Wedge Develops at Long-Term Resistance

A potential bearish rising wedge (purple) has formed in the USD/JPY pair as price action approaches a critical decision area defined by resistance near a long-term declining trendline. For nearly a week, the pair has tested highs around 154.49 and the line, showing persistent demand as buyers attempt to push through resistance and establish new trend highs. While this behavior signals underlying strength, the pattern also warns that the advance may be losing momentum as the pair consolidates near a potential high. 

Larger Trend Channel Defines Broader Structure

The wedge pattern remains contained within a larger rising trend channel, maintaining the broader bullish framework. The top boundary of that channel was recently reached by the subsequent consolidation shows the potential to go a little higher to fill out the wedge structure. This suggests that prices could still edge higher before any potential reversal develops. The next upside objective lies near 154.82, aligning with the 78.6% Fibonacci retracement and the upper boundary of the channel. A sustained move to this zone could complete the wedge formation and mark an inflection point, setting the stage for either a continuation breakout or a sharp corrective reaction.

20-Day Moving Average Aligns as Dynamic Support

Support within the pattern has been reinforced by the 20-day moving average, which recently converged with the lower boundary of the wedge. This alignment underscores its importance as short-term dynamic support. A decisive drop through this area would represent the first clear sign of weakening momentum. Specifically, a move below 152.96 would confirm a bearish trigger, signaling that sellers have regained short-term control and opening the way toward lower prices and possibly the lower boundary of the broader trend channel.

Comparison with 2024 Rally Highlights Momentum Divergence

The prior rally from the September 2024 bottom retraced nearly to the 88.6% Fibonacci level before reversing lower. The current advance, which began from an April low, has so far reached almost to the 78.6% retracement area. If resistance holds and a correction develops from this zone, the weaker extension compared to the 2024 move would highlight a loss of upside momentum and a potential shift toward a more corrective phase in the months ahead.

Key Levels to Invalidate the Bearish Scenario

To negate the bearish wedge setup, USD/JPY would need to sustain a close above 154.82, signaling renewed strength and a clear break above the long-term downtrend line. Such an outcome would open the path toward continuation targets along the upper channel boundary and possibly higher trend levels beyond. However, repeated failures to clear resistance suggest a hesitancy among buyers, maintaining a cautious tone in the near-term outlook.

Watching Support Levels and Moving Averages Below

If a breakdown unfolds, initial support areas to monitor include the 50-day moving average and the 61.8% Fibonacci retracement near 149.61, both of which could attract buying interest and trigger rebounds. Of greater significance, however, is the 200-day moving average, which was reclaimed in early October after serving as dynamic resistance for much of 2025. Since that level has not yet been retested as support, a return toward it remains plausible. Such a move could define the next major swing low within the broader channel.

 

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