• The formation of a Bullish Flag bolsters the odds of recapturing all-time highs at 139.40.
• Advancing 200-EMA claims that the uptrend is intact.
• For a decisive upside, the RSI (14) needs to violate 60.00.

The USD/JPY pair has witnessed a steep fall after facing barricades around 137.20 in the Asian session. The pair has slipped to near 136.60 and is expected to display topsy-turvy moves as the asset is oscillating inside Tuesday’s trading session continuously.

On an hourly scale, the asset is forming a Bullish Flag chart pattern that signals for a continuation of a bullish move after an upside break of the consolidation zone. Usually, the consolidation phase serves as an inventory adjustment in which those participants initiate longs, which prefer to enter an auction after the establishment of a bullish bias.

The 50-period Exponential Moving Average (EMA) near 137.00 has turned sideways, which indicates a consolidation ahead. While the 200-EMA at 136.00 is still advancing, this signals that the long-term trend is bullish.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range. It conveys the unavailability of a potential trigger for a conviction move.

A break above the August 24 high at 137.25 will drive the asset towards all-time highs at 139.40, followed by the round-level resistance at 144.00, which also serves as Gann’s square resistance methodology.

On the flip side, a downside move below Tuesday’s low at 135.81 will drag the asset towards the August 8 low at 134.39. A breach of the latter will drag the asset towards the August 11 low at 131.73.

USD/JPY hourly chart