USDJPY met heavy resistance from the soft descending line drawn from the 114.54 top last week, ending bullish action at a four-month high of 112.39. The pair is currently fluctuating around its 200-day simple moving average (SMA), with momentum indicators pointing to a neutral-to-bullish short-term trading; the red Tenkan-sen is flat slightly above the blue Kijun-sen, while the RSI is set to cross above its 50 neutral mark.
For a meaningful rally the bulls probably need to jump above the downtrend line seen around 112.30, where the 78.6% Fibonacci of the downleg from 114.54 to 104.64 is also placed. Higher, the next battle could develop between 113.70 and 114.20, key resistance levels during November and December.
In case the bears retake control, the price could initially rest near yesterday’s low of 111 before touching the 61.8% Fibonacci of 110.74. Beneath the latter, the decline may next pause between 110 and the 50% Fibonacci of 109.58, which if significantly broken would raise speculation over a trend reversal; such a move would violate the upward pattern started in January.
Meanwhile in the medium-term timeframe, USDJPY is still enjoying positive conditions thanks to the higher highs and higher lows registered since the start of the year.
In brief, USDJPY faces a neutral-to-positive bias in short term, while in the medium-term picture the outlook remains bullish.
