USDJPY got rejected from the 114 area after touching the 114.20 mark early this week, with the pair reversing part of its recent rebound in the following days. The red Tenkan-sen line, however, is still above the blue Kijun-sen line and has started to point to the upside again, while the RSI looks to be changing direction north as well, both hinting further improvement for the market. Yet the latter is not far below its 70 overbought threshold and the MACD continues to weaken towards its red signal line suggesting that gains might be short-lived.
Should negative momentum continue below 113.30, the 23.6% Fibonacci of the upleg from 109.36 to 114.54, the bears could retest the inside swing high of 112.89 before potentially meeting the 38.2% Fibonacci of 112.55. Moving lower, a decisive close below 111.37 where the 61.8% Fibonacci is placed could trigger additional bearish actions, with the price probably falling until 110.83, a frequently approached area in the past two years.
Alternatively, a bounce up could push efforts to overcome the previous tops at 114.20 and 114.54. If this prove successful, resistance could run towards the 115.50 high reached on March 9, while even higher the door would open for the 116.00 psychological level.
In the medium-term picture, the pair retains a bullish outlook over the past three months, and this should stay intact as long as it holds above 112.00. The 50-day simple moving average keeps gaining strength above the longer-term 200-day MA, signalling that the positive picture is not about to fade anytime soon.
To sum up, USDJPY holds bullish both in the short and the medium-term picture.
