USD/JPY technical analysis: Tests 200-day MA for first since May 3

• USD/JPY has tested the 200-day MA for the first time in over five months. 
• A break above the key average would bolster the bullish setup. 
• A move below 108.25 would invalidate a higher lows setup. 

USD/JPY has tested the 200-day moving average – a barometer of a long-term market trend – for the first time since May 3. 

The currency pair is currently trading at 108.98, representing marginal gains on the day, having probed the 200-day MA line of 108.05 in the early Asian trading hours. 

A daily close above the long-term average would bolster the bullish setup, as represented by the flag breakout on the 4-hour chart and strengthen the case for a rally to 110.00. 

The bullish case would weaken if the 200-day MA repeatedly proves a tough nut to crack. That said, a bearish reversal would be confirmed if and when the spot invalidates higher lows set up with a move below 108.25. 

Daily chart

Trend: Bullish above 200-day MA

Technical levels