USD/JPY Price Analysis: There is a difficult broadening wedge pattern making an appearance on the hourly chart

• USD/JPY is trading 0.18% higher on Tuesday in a mixed session for the dollar.
• The price is hovering around 107.50 which is a previous support zone.

USD/JPY 1-hour chart

The greenback is having a mixed session on Tuesday and performs well against the JPY, AUD and EUR but is struggling against the GBP and NZD. The risk sentiment in the equities market is also mixed this afternoon as the tech-heavy Nasdaq trades 0.13% higher and the Dow and S&P lag behind in the red. The USD/JPY pair is often a good measure of risk sentiment but recently the correlation has become muddled and both USD and JPY fight for safe-haven status. In the medium-term, if the US continues to struggle with the COVID-19 pandemic and the BoJ run out of policy options maybe the pair will weaken.

Looking at the chart, any broadening pattern is difficult to trade. It confirms that the market is without a clear trend-making higher highs and lower lows at the same time. The indicators are not making too much sense of the recent price action too. The Relative Strength Index is in the middle near the 50 line and the MACD histogram just popped under zero with the signal lines are above the mid-point.

Looking forward, a break of this pattern would help us determine the future path of the pair. If the pair is to break lower the wave low 107.25 a good place to start. That aforementioned level could be a support zone but if the price does break it, it could give us an indication that some more bearish price action is ahead. On the topside, the next resistance lies at 107.75 and if there is a clear break of that zone the high on the chart of 108.16 could be tested.

Additional levels