Aug 3 (Reuters) - USD/JPY has undergone a dramatic technical shift after a sustained uptrend spanning April 2025 through July 2026. The pair reversed sharply in late July, plunging from an intra-month high of 163.99 to close at 157.38 (EBS) — carving out a textbook bearish key reversal month. For technicians, this pattern carries weight: a fresh bull-trend high followed by a close at or below the prior month's low signals exhaustion, particularly after an extended, one-directional advance of this magnitude.

The reversal was accompanied by significant technical damage. USD/JPY has decisively broken below its 50- and 100-day moving averages, while also slicing through the Ichimoku Cloud (Kumo) — a zone that had previously acted as robust dynamic support. The loss of the Kumo as a floor often marks a genuine regime shift rather than a routine pullback.

• Daily Relative Strength Index (RSI) has collapsed to 24.37, deep in oversold territory (sub-30). While confirming intense selling pressure, readings this extreme are historically overextended and often precede a corrective bounce or consolidation before further downside.

• The 14-day momentum oscillator sits at -5.445, underscoring high-conviction bearish velocity.

• Price has broken sharply below the lower Bollinger Band, signalling volatility expansion and "band-walking" — typically indicative of a strongly trending market near-term, even as RSI argues for caution on fresh shorts.
Key Levels to Watch: 155.00 — initial support, the May 2026 swing low, then 154.78 — 38.2% Fibonacci retracement of the April 2025–July 2026 bull run (139.89–163.99) and 152.28 — support, aligning with the February 2026 low.

The bearish key reversal month, daily moving average/Kumo breakdowns, and Bollinger Band expansion support a structural trend change. However, the extreme RSI reading suggests near-term downside may be vulnerable to a relief rally before the 154.78–152.28 zone is tested. Traders are likely to weigh the reversal signal's strength against the risk of chasing an extended move, with 155.00–154.78 likely the first key battleground.
USD/JPY Monthly Chart:


USD/JPY daily chart:


(Peter Stoneham is a Reuters market analyst. The views expressed are his own)