The USD/JPY pair has recently formed a bearish Rising Wedge pattern on its 4-hour chart. This pattern suggests that the pair may be at risk of further declines in the near future. The formation of this pattern has changed the outlook for USD/JPY, which was previously in a short-term uptrend.
The Moving Average Convergence Divergence (MACD) indicator has been showing a divergence as the price has continued to rise. This bearish divergence adds to the downside risks for the pair. A decisive break below the lower trendline of the wedge would confirm a breakdown and could lead to a decline to around 148.40, which is the 61.8% Fibonacci extrapolation of the height of the wedge.
Further downside could see support levels at 148.27 and 147.23 being tested. A decisive break would be characterized by a longer-than-average red candlestick clearing the lower line of the wedge or three consecutive red candles breaking below the bottom of the wedge.
Overall, the formation of the Rising Wedge pattern suggests that USD/JPY may see more weakness in the coming days. Traders should keep an eye on the lower trendline of the wedge for a potential breakdown and monitor key support levels for potential entry and exit points.
