USDJPY has been moving sideways over the last week, holding within the 61.8% Fibonacci retracement level of the upward wave from 114.64 to 151.93 at 128.70 and the 131.20 resistance level. The pair exited from the medium-term downward sloping channel but the momentum is too weak to support more gains.
Regarding the technical oscillators, the RSI is pointing marginally up in the negative territory, while the stochastics posted a bullish crossover within its %K and %D lines, approaching the overbought region.
Should the price retreat, the 61.8% Fibonacci at 128.70 which the bears were unable to break this week could provide immediate support. Moving lower, the focus will shift to the seven-month low of 127.24 ahead of the 125.10-126.30 area.
In the alternative scenario, traders would be eagerly looking for a break above 131.20 to increase buying orders. If that’s the case, the rally could last until the 50.0% Fibonacci at 133.10, which overlaps with the 50-day simple moving average (SMA). If bullish forces appear even stronger, the 134.50 mark and the 200-day SMA at 136.85 could be another resistance to keep in mind.
All in all, USDJPY is lacking direction in the short-term timeframe; however, in the bigger outlook the market is still bearish.
