USDJPY has been underperforming since yesterday, breaking back below the 50.0% Fibonacci retracement level of the downleg from 114.55 to 104.64, around 109.60 and the 20-simple moving average (SMA) in the daily chart. The price recorded a fresh two-week low of 108.68.
Momentum indicators are pointing to a negative bias in the short term with the RSI just below 50 and the stochastic oscillator approaching the oversold area. However, the 20-SMA is pointing slightly up despite the latest bearish pullback, while the 40-SMA continues to head south.
In the negative scenario, where the price continues to extend below today’s low, a new bottom could be formed around the 108.40 support, which is the 38.2% Fibonacci mark. If the market manages to plunge below that area, traders could look for next stop at the 107.80 obstacle before steeper bearish actions take the price down to the 23.6% Fibonacci, which stands near the psychological level of 107.00.
A reversal to the upside could stall at the 109.20 resistance and slightly higher at the 50.0% Fibonacci of 109.60. Further up, the price could find resistance near the 110.00 – 110.35 area, which encapsulates the 40-SMA. Any violation of this point could potentially trigger more buying interest in the market, probably leading the price up to 61.8% Fibonacci of 110.75.
When looking at the bigger picture the pair lacks a clear trend and has been consolidating over the last two years with upper boundary the 114.55 resistance and lower boundary the 104.60 support.
