USDJPY has been trading inside an ascending wedge formation on its short-term time frame, and the pair appears to be bouncing off the lower boundary of this chart pattern. This suggests that bullish momentum could carry price back up to test the wedge resistance or even trigger a break higher.

The pair is currently finding support around the 154.00 major psychological handle, which coincides with the ascending wedge bottom and the 100 SMA dynamic inflection point. A sustained bounce from this area could pave the way for a rally back to the wedge top near 155.00 or higher.

However, traders should keep in mind that ascending wedges are typically considered bearish reversal patterns, so a break below the lower boundary could signal a shift in trend and open the door to steeper losses.

The 100 SMA (blue line) has recently crossed above the 200 SMA (red line) to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction from here. The gap between the indicators is widening to reflect strengthening bullish pressure, which bodes well for further gains.

Stochastic is pulling up from the oversold region, indicating that buying pressure is building. The oscillator has plenty of room to climb before reaching overbought territory, which means the rally could sustain momentum in the near term without exhaustion setting in.

RSI is also turning higher from the middle of its range, reflecting that buyers are regaining control. The indicator has room to move north before hitting overbought levels, so price could keep following suit while bulls have the upper hand.

USDJPY could take cues from upcoming economic data releases and central bank rhetoric from both the Federal Reserve and Bank of Japan. Any shifts in monetary policy expectations or risk sentiment could influence the pair’s directional bias going forward.