Downtrend resumes, bears target August lows

• USD/JPY has broken below a key support level and is trending lower.
• The August 5 lows are the next target at 141.69.

USD/JPY is resuming its medium-term downtrend after a punctuated break in August.

The pair broke above the key lows of 143.45 (26 August low) – a bearish sign reversing the trend. Sellers are now eyeing the key August 5 lows at 141.69.

USD/JPY 4 Hour Chart

USD/JPY is likely in a near-term downtrend and given the saying “the trend is your friend”, the odds favor more downside.

The pair is likely to reach the lows of 141.69. A break below this would likely lead to further weakness towards the next support level at 140.44.

The Relative Strength Index (RSI) momentum indicator is oversold, however, so traders are advised not to add to their short positions. If the RSI breaks out of the oversold, it will be a signal that a countertrend correction is underway.