USDJPY has consolidated into a sideways market over the last three-weeks, after falling from around the 100-day simple moving averages’ (SMA) zone. The pair has been unable to close above 106.77 resistance level despite multiple attempts, and now the bulls are at it again.
The MACD is above its red trigger line and in the negative zone, reflecting weakening negative momentum. However, the RSI is hovering just below the 50-level, concurring with the bigger bearish picture of the SMAs, implying that a revival of the move down cannot be ruled out.
If the 21-day SMA and the 106.32 level, which is the 23.6% Fibo of the down leg from 112.39 to 104.45, were to hold, and the bears take back the reins, initial support could come at 105.05, near the 105.00 handle. If they manage to push lower, the support region of 104.64 -104.45 may be a stronger adversary. If the selling persists, the 103.35 support could draw traders focus.
Moving north above the 21-day SMA and 23.6% Fibo of 106.32, the 106.77 resistance could apply some pressure. Breaching higher, the price could test the 107.20 resistance level, where the 42-day SMA also lies. A bigger obstacle could arise around the resistance region of 108.42 to 109.00, where the 50.0% Fibo and 100-day SMA also reside.
Overall, the short-term bias could turn neutral above 110.00, but if the market stays below the 106.77 level, the downwards spiral may continue.
