USD/JPY dips below 4H 200MA in Asia, creates the bullish chart pattern

• The yen strengthens in holiday-thinned trade.
• Creates a bull flag pattern on the hourly chart.

The Yen picked up a bid in Asia, pushing the USD/JPY below the 4-hour 200-MA (moving average) and to a session low of 106.14.

USD/JPY eyes a quarterly drop

The pair is all set to end the first quarter down, at least 5 percent. That said, as discussed yesterday, much of the bad news has been priced-in, so the spot could regain some poise in the next quarter. However, the sell-off may resume if the S&P 500 index finds acceptance below the 200-day MA.

For now, it appears the pair has bottomed out at 104.57. Further, the hourly chart shows a bull flag - a bullish continuation pattern. A break above 106.50 (flag resistance) would signal a continuation of the rally from the March 28 low of 105.43.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik sees scope for a further upside move in the upcoming sessions.

"Technically, the 4 hours chart shows that the pair managed to hold above a bearish 200 SMA, despite briefly breaking below it, while technical indicators stalled their declines and are attempting to regain the upside, having corrected extreme overbought readings, all of which leans the scale toward the upside for the upcoming sessions."

Support levels: 106.25 105.90 105.50   

Resistance levels: 106.60 107.00 107.40