USDJPY held a floor within the 104.00 – 104.20 area, keeping the downward pattern paused within the descending channel for the fourth month.
Currently, the RSI is running towards its 50 neutral mark after bottoming out within the bearish area, suggesting that the bulls may not abandon the battle in the short-term. Adding to this encouraging signal is the price itself, which is stubbornly refusing to visit the lower band of the channel, hinting that a test of the upper band is more likely instead.
Still, the 20- and 50-day simple moving averages (SMAs) seem to have built a strong wall within the 105.00 zone, which the pair needs to jump over in order to rally towards the channel’s upper surface seen around 106.00. The 23.6% Fibonacci retracement of the 109.84-103.99 downleg is also adding pressure at the same location of 105.37, making any upside break meaningful. However, even if that is the case, a decisive close out of the channel and above the 38.2% Fibonacci of 106.22 could be more convincing that the rally may continue, especially if the pair manages to breach the 50% Fibonacci of 106.90 too.
In the negative scenario, where the 104.00 – 104.20 base collapses, the bearish outlook would gain more credence, likely triggering an aggressive sell-off until the 103.00 round level. Slightly deeper, the 102.26 barrier taken from March 9’s closing price should be closely watched as well.
Summarizing, USDJPY seems to be gathering bullish traction near a key resistance area, though only a break above the channel could brighten the short-term outlook.
