USD/JPY: Inverse Head & Shoulders Ignites a Bullish Signal
21 October 2025
In today’s technical analysis, let’s take a closer look at the American Dollar to Japanese Yen (USD/JPY), which is showing clear signs of a bullish reversal. The pair has been under pressure for the past few weeks, but now the situation looks entirely different. The price recently bounced off the key orange horizontal support zone, which corresponds to the highs from September — an area that is proving once again to be crucial for buyers. This bounce is not random; technically, it has formed a textbook inverse head and shoulders pattern, highlighted with yellow rectangles on the chart.
Currently, USD/JPY is breaking through the red neckline of this pattern — a move that activates a proper long-term buy signal. The bullish setup is further reinforced by a breakout above the blue downtrend line, which had been containing the price action since the start of the correction. Together, these two technical developments — the neckline breakout and the trendline break — indicate strong momentum for further upside movement.
As long as the pair stays above the orange support zone, sentiment remains decisively bullish. This area will now act as a key invalidation level — a drop and daily close below it would cancel the buy signal and shift focus back to the downside. However, given the current momentum and the strength of the reversal structure, such a scenario seems less likely for now. In summary, USD/JPY looks technically poised for further gains, supported by a clean inverse head and shoulders breakout and renewed bullish energy behind the U.S. dollar.