USDJPY has come under selling pressure after hitting a seven-month high of 142.24 earlier today. Caution likely set in as the pair approached the 61.8% Fibonacci retracement level of the October 2022-January 2023 downtrend at 142.49.
But whilst the stochastic oscillator is indicating further losses in the short term as it has gone into a sharp downside reversal, heading for the oversold region below 20.0, the RSI is showing signs of stabilization just above the 50 neutral level.
The price action is underscoring the latter picture in the 4-hour chart as the 20-period simple moving average (SMA) has stepped in to defend the pair. Should it give way, the 50-period SMA is likely to be the next point of friction around 140.35. Slightly lower is an even more crucial support area around 140.10 where the lower Bollinger Band has flatlined and is where the upper Bollinger Band repeatedly capped prices during June. If the bears are able to penetrate this heavily fortified region, they will almost certainly aim for the 200-period SMA next.
However, if USDJPY manages to bounce off the 20-period SMA, it will probably have another attempt at cracking the 61.8% Fibo, which would then clear the way for the 144.00 and 145.00 levels.
Summing up, the negative bias in the very short term could be temporary if the 20-period SMA holds but breaching it would fuel the bearish forces, especially if the price also falls below 140.10. However, the bullish outlook in the medium term should stay intact as long as USDJPY trades above the 200-period SMA.
