USD/JPY Rising Wedge Pattern Signals Potential Reversal Setup

USD/JPY displays a textbook rising wedge formation on the daily chart, suggesting potential exhaustion of the recent uptrend and possible reversal ahead. The pair has been grinding higher within narrowing boundaries, currently testing the upper trendline near key resistance levels. This bearish reversal pattern typically indicates waning bullish momentum, with the dollar index showing signs of topping after its recent rally. Japanese yen strength could emerge if the pattern completes, particularly as traders reassess Bank of Japan policy expectations amid persistent inflation concerns. Technical indicators show declining volume on recent advances, confirming the wedge characteristics and increasing probability of a breakdown. Key support lies at the lower wedge boundary around 149.50, while a convincing break below could accelerate losses toward 148.00. Risk management remains crucial as false breakouts are common with wedge patterns. Traders should monitor US dollar index movements closely, as broader dollar weakness would likely catalyze the expected USD/JPY reversal.