USDJPY had an impressive bullish rally over the last three daily sessions, finding strong support at the five-month ascending trend line and the 108.30 barrier. Earlier today, the price recorded a new two-week high near the strong 110.00 psychological number, successfully surpassing the 20- and 40-day simple moving averages (SMAs).
From a technical viewpoint, the stochastic entered in the overbought zone and is still pointing north, while the RSI indicator is gradually moving up into the positive territory. Both are confirming the recent upside momentum on price.
Should the market make another run higher, it’s likely to meet resistance at the seven-month peak of 110.28. A successful break above this key resistance area would open the way for the 110.65 level and the 111.00 handle.
In the negative scenario where the 20- and 40-period SMAs fail to halt movements, the market could retest the 23.6% Fibonacci retracement level of the upward wave from 104.45 to 110.28 near 108.90. If this proves easy to overcome this time, the decline may next pause somewhere between the 108.30 support and the 38.2% Fibo of 108.05, penetrating the rising trend line in the daily timeframe.
In the medium-term window, USDJPY could endorse the positive picture only if there is a clear climb above the 110.28 roof.
