USDJPY has been edging sharply lower over the last couple of days, while today it slipped beneath the 23.6% Fibonacci retracement level of the upleg from 104.60 to 114.55, around 112.20. Additionally, the pair is trying to penetrate the medium-term ascending trend line to the downside, shifting the bullish outlook to a more neutral one.
The momentum indicators in the daily timeframe are supportive of this bearish picture. The RSI indicator is falling below the threshold of 50, while the MACD oscillator dropped slightly below the zero line as it also holds below the trigger line.
Should the price extend losses and successfully break the 111.75 barrier, this would open the way towards the 38.2% Fibonacci mark of 110.75. Even lower, immediate support is coming from the 110.35 hurdle, identified by the bottom on September 7, endorsing the neutral to bearish scenario.
On the upside, if the market manages to pick up speed and rebound on the diagonal line, the price could re-touch the 23.6% Fibonacci and the 40-day simple moving average (SMA). Above these obstacles the pair could re-challenge the 20-day SMA near 112.85 at the time of writing. Moreover, an aggressive rally higher, could extend gains and touch the 11-month high of 114.55.
In the medium-term, the outlook would change to a neutral to bearish one if there is a closing day below the uptrend line, which has been standing since March 26. Currently, in the very short-term timeframe, USDJPY posts a negative structure confirmed also by the SMAs.
