USD/JPY Price Prediction: Falling into a Possible Bearish Expansion Formation

• USD/JPY is falling within a possible bearish reversal pattern.
• Called an “Expansion Formation,” such a pattern would have bearish implications for the price.

USD/JPY appears to be falling within an evolving bearish Expansion Formation price pattern (see chart below).

If this is the case, then the pair will likely eventually decline towards the pattern’s lower boundary line around 151.50. After that, it could even break below that line and fall to the projected target for the Expansion Formation (EF) itself, around 148.54.

USD/JPY Daily Chart

The (blue) Moving Average Convergence/Divergence (MACD) is moving lower after crossing below the red signal line – a bearish indication.

USD/JPY breached the FE upper limit line on November 14 before quickly falling within it the following day. This was likely a sign of exhaustion and is a sign of an imminent reversal on the horizon.

That said, it’s also possible that the pattern is fake. If so, USD/JPY would still be in a strong medium-term uptrend, and given the technical analysis principle that “the trend is your friend”, the odds would favor further upside.

In such a case, a break above 156.25 would likely confirm further gains towards a target around 157.86 (July 19 high).

Another possibility is that the main trend line could provide support for the price at 152.90, slowing its decline towards the FE lower boundary line.