USDJPY has been moving sideways the past week within the 104.00 area and slightly below its 20-day simple moving average (SMA), showing no intention to escape the eight-month old bearish channel.
The bearish cross within the downward-sloping 20- and 50-day SMAs continues to back the negative pattern in the price, while the RSI and the MACD have barely shown any persisting strength over the past week, keeping the case of a meaningful rally in the market muted.
On the upside, the upper surface of the cloud currently seen around 105.20 is at a reachable distance, but the bulls may first need to claim the 23.6% Fibonacci of the 109.84 – 103.17 downleg at 104.74 before they target that obstacle. A significant step above the channel may raise buying interest, and it would be interesting to see if the 38.2% Fibonacci of 105.70 can halt the rally as it did several times over he past two months, deterring any move towards the 200-day SMA and the 50% Fibonacci of 106.50.
Alternatively, a downside reversal below the 104.20 mark, which has been frequently tested from the end of October onwards, could open the door for the swing low of 103.64. If sellers manage to pierce the 103.16 trough too, the decline could sharpen towards the key 102.26 support region.
In brief, USDJPY is looking neutral in the short term and bearish in the medium term.
