The USD/JPY currency pair is trading near 144.50 on Friday amid thin liquidity conditions, as U.S. markets remain closed in observance of Independence Day. Price action is confined within a tightening range, reflecting market indecision and caution, with technical signals suggesting an impending breakout, though the pair currently lacks directional momentum. 

You’ll find a clear and thorough breakdown of this subject by the Servelius brokers in their article.

Symmetrical Triangle Signals Tension

USD/JPY remains well-supported above the ascending trendline forming the base of a symmetrical triangle pattern that has been unfolding since mid-April. This technical formation, defined by lower highs and higher lows, typically precedes a volatile breakout as price action converges toward the apex. 

In this case, with the pair still oscillating within the bounds of the triangle, the bias remains neutral-to-bullish, albeit with waning conviction.

The formation of a long-legged doji on the weekly candle adds weight to this narrative of uncertainty. Long-legged doji patterns often appear at inflection points, signaling a tug-of-war between buyers and sellers. As the current weekly candle develops near this equilibrium point, it reinforces the notion that a significant directional move may be on the horizon.

Key Technical Levels in Focus

The 50-day Exponential Moving Average (EMA), currently positioned near 144.90, acts as immediate resistance. A sustained break above this dynamic barrier could provide the initial spark for bullish continuation, opening the path toward the upper boundary of the triangle, which lies in the 146.50–147.00 zone. 

This zone also coincides with prior resistance levels and psychological round figures, adding to its technical significance.

On the downside, initial support is located near 143.50, which aligns with Thursday’s low and also touches the ascending support trendline that forms the triangle’s lower boundary. A daily close below 143.50 would undermine the bullish structure and tilt short-term bias in favor of sellers, potentially accelerating losses toward 142.50 (low from July 1) and, more critically, toward the April swing low near 139.89.

These levels mark critical inflection points that traders are closely monitoring, as a break on either side of the triangle would likely trigger increased volatility and a fresh wave of positioning.

Momentum Indicators: Mixed and Muted

From a momentum perspective, indicators continue to reflect the lack of commitment from either bulls or bears. The Relative Strength Index (RSI) on the daily chart hovers around 49, a level that implies a neutral stance. However, the slight downward slope in the RSI hints at fading bullish pressure, indicating that sellers are slowly gaining ground within the prevailing range.

The Moving Average Convergence Divergence (MACD) indicator further underscores the lack of conviction. The MACD line is marginally below the signal line, and the histogram is narrowing, suggesting diminished momentum and a wait-and-see attitude among traders. 

With both the RSI and MACD signaling hesitation, it becomes clear that markets are awaiting a catalyst before committing to a directional move.

Market Context: Low Volatility and Caution Ahead of Breakout

The subdued behavior of USD/JPY can be partly attributed to holiday-thinned trading conditions, with liquidity drying up as U.S. financial markets remain closed for Independence Day. As a result, price action has been largely range-bound, with smaller intraday moves and low trading volumes.

Despite this, the structural integrity of the symmetrical triangle remains intact. Given the tightening price range, a volatility expansion is likely once normal liquidity returns and market participants re-engage. Traders should therefore be prepared for a sharp move in either direction as the triangle reaches its final stages of compression.

Historically, symmetrical triangles tend to resolve in the direction of the prevailing longer-term trend, which, in USD/JPY’s case, has been bullish for much of the past year. However, confirmation via a breakout and follow-through remains essential before adopting a directional bias.

Conclusion: Tension Builds Within a Technical Coil

The USD/JPY pair is coiling within a symmetrical triangle, and the narrowing price action suggests a breakout is imminent. Despite the current lack of momentum, the formation of a long-legged doji on the weekly chart highlights rising market indecision, which often precedes volatility surges.

As the pair approaches the apex of its triangle, technical traders are watching closely for signs of a breakout. With key support and resistance levels well-defined and momentum indicators neutral, the next catalyst, be it fundamental or technical, could decide the pair’s near-term trajectory. Until then, caution prevails, and volatility is expected to return once liquidity normalizes.