USD/JPY technical analysis: Down but not out, remains on hunt for 200-day MA hurdle

• USD/JPY is flashing red but remains in a bullish territory on the daily chart. 
• A flag breakout confirmed on Tuesday is still valid. 
• The pair remains on track to test key resistance at 109.06.

The USD/JPY pair is currently trading near 108.70, representing 0.15% losses on the day. 

The pair has come under pressure in the Asian session, possibly due to the Sino-Us political friction and the haven demand for the anti-risk Yen. 

Even so, the technical bias remains bullish as a bull flag breakout confirmed on Tuesday is still valid. 

The flag breakout is a continuation pattern that usually accelerates the preceding bullish move (104.45 to 108.48). 

The pair, therefore, looks set to test the 200-day moving average (MA) hurdle at 109.06. The bullish case looks stronger if we take into account the ascending 5- and 10-day MAs and the above-50 reading on the relative strength index. 

Further, the MACD histogram is printing higher bars above the zero line, signaling a strengthening of bullish momentum. 

Daily chart

Trend: Bullish

Technical levels