USD/JPY Price Analysis: Bears approach 138.40 key support

• USD/JPY takes offers to refresh weekly low, prints three-day downtrend.
• Ascending trend line from August lures sellers but RSI conditions challenge further downside past 138.40.
• 100-DMA, recent swing high guard recovery moves, October’s low holds the key for buyer’s entry.

USD/JPY stands on the slippery ground as it renews its weekly low near 138.80 during early Thursday. In doing so, the Japanese Yen (JPY) pair drops for the third consecutive day after reversing from the 38.2% Fibonacci retracement level of the May-October upside.

In addition to the U-turn from an important Fibonacci hurdle, a clear downside break of the 100-DMA and bearish MACD signals also favor USD/JPY bears.

However, an upward-sloping trend line from early August, around 138.40 by the press time, could restrict the Yen pair’s further downside amid a nearly oversold RSI (14) line.

Even if the quote breaks the 138.40 support, a six-month-old ascending support line, close to 136.90 at the latest, will act as an additional downside filter to challenge USD/JPY sellers.

It’s worth observing that the 61.8% Fibonacci retracement level near 136.10, also known as the golden ratio, will act as the last defense of the USD/JPY bulls.

On the contrary, the 100-DMA and the aforementioned 38.2% Fibonacci retracement level, respectively near 141.15 and 142.20, could restrict the short-term upside of the pair.

However, a horizontal area comprising multiple levels marked since early September, close to 145.10, will be a tough nut to crack for the USD/JPY bulls.

USD/JPY: Daily chart

Trend: Further downside expected