USDJPY is trying to overcome the 113.00 area as well as the 20- and 40- simple moving averages (SMAs) in the daily timeframe today following the rebound on the 112.30 support level, which overlaps with the ascending trend line. The RSI indicator looks to be changing direction as it surpasses the neutral threshold of 50. The stochastic oscillator is moving higher, both hinting further improvement for the market.
A run higher could push efforts to drive the pair towards the 114.20 resistance, taken from the highs on November 12. In case of a break above this hurdle, the 11-month high of 114.55 could be the next level for investors to look for. If this prove successful, resistance could run towards the 115.50 high, reached on March 2017.
However, should negative momentum come into play again and the price slides below the rising trend line as well as below the 23.6% Fibonacci retracement level of the upleg from 104.60 to 114.55, around 112.30, the bears could retest the 111.40 support level, registered on October 26. Moving lower, the 38.2% Fibonacci of 110.75 could be a stop for the bears before slipping until the 110.35 area.
In the bigger picture, the pair retains a bullish outlook over the past eight months, and this should stay intact as long as it holds above the diagonal line. A daily close below this line could shift the outlook to a more neutral to bearish one.
