USDJPY posted a bullish doji candle yesterday and maybe is a sign for further bullish actions after two consecutive red days. However, the technical indicators are endorsing an opposite scenario. The RSI is flattening near its overbought territory, while the stochastic pulled back from the 80 level and created a bearish crossover within its %K and %D lines.
If the market corrects higher, the bullish action may pause initially near the 24-year high of 139.35 ahead of the 140.00 psychological mark. A rally above the latter would probably stage fresh buying interest, with the price moving next to the 146.83, registered in June 1998.
On the other hand, violating the 137.00 round number could see losses extending towards the medium-term ascending trend line around 135.50. Even lower, the bears could stall near the 40-day simple moving average (SMA) at 134.25.
In the medium-term picture, USDJPY would resume an upside trend above the 24-year high, while a dive below 134.25 would bring the bearish outlook into play. It is also worth noting that the 40-day SMA keeps distancing itself above the 200-day SMA, raising optimism for a bull market.
