USD/JPY Price Analysis: Reverses from three-week-old resistance towards 138.00

• USD/JPY extends pullback from a six-week high, renews intraday low of late.
• Rising wedge bearish formation gains major attention but 137.00 is the key to further downside.
• Yearly high appears a tough nut to crack as RSI nears the overbought territory.

USD/JPY takes offers to renew intraday low around 138.40 during early Tuesday morning in Europe. In doing so, the yen pair prints the first daily loss in three while reversing from the 1.5-month high marked the previous day.

That said, the quote’s latest pullback could be linked to the failure to cross an upward-sloping resistance line from August 05. Also highlighting the odds of a pullback is the nearly overbought RSI (14).

While the latest pullback moves are likely to direct USD/JPY bears towards the 138.00, the pair’s further weakness appears difficult as the confluence of the 10-DMA and a short-term support line challenges bears near the 137.00 round figure.

It’s worth noting, however, that the rising wedge bearish chart pattern around the multi-day high could gain major force if the USD/JPY breaks the 137.00 support.

Following that, the 61.8% Fibonacci retracement level of May-July upside and the monthly low, respectively near 131.30 and 130.40, could entertain traders during the theoretical target surrounding the 130.00 psychological magnet.

Meanwhile, recovery moves may aim to defy the wedge formation by crossing the 139.00 resistance.

Even so, the latest multi-month high near 139.40 and the 140.00 threshold might join the overbought RSI to probe the USD/JPY bulls.

USD/JPY: Daily chart

Trend: Further weakness expected