USDJPY has been developing within an upward sloping channel over the last two months, after the significant rebound on the ten-month low of 104.64. The bullish tendency drove the price near the 61.8% Fibonacci retracement level of the downleg from 114.55 to 104.64, around 110.75, pointing the start of a new positive structure in the near term.
However, technical indicators have been moving with weak momentum over the past few sessions. The RSI indicator is sloping to the downside, approaching the 50 level, while the MACD oscillator is flattening near the trigger line above the zero line.
On the upside, the price could attempt to overcome the 111.40 resistance and the 200-day simple moving average (SMA), retesting the upper boundary of the channel around 111.70, which if successfully broken the door could open for the 112.30 barrier, taken from the inside swing bottom on November 2018. Should traders continue to move the market higher, resistance could then run towards the 113.70 hurdle, where it topped in December 2018.
A reversal to the downside, could find immediate support at the 110.35 level, which overlaps with the 20-day SMA ahead of the 40-day SMA and the 50.0% Fibonacci region near 109.60. If the latter fails to hold bearish movements, the next target could be at the 38.2% Fibonacci, which conflicts with the 108.40 support.
Turning to the long-term trading view, the outlook has been neutral since March 2017 and only a decisive close above the 11-month high of 114.55 could resume the bullish picture. On the other hand, a decline below 104.64 could shift the picture to bearish.
