USDJPY bulls got exhausted near the 200-day simple moving average (SMA), letting the price to slump back into the 104.00 area on Tuesday.
The pair, however, has not violated the short upturn from the 102.58 bottom yet, leaving the door open for a potential trend continuation as long as the price holds above the swing high of 104.39 and the 20-day SMA. Notably, the bullish cross between the 20- and 50-day SMAs is still endorsing a trend improvement.
The momentum indicators, although weaker, are also keeping some optimism alive, as the RSI continues to fluctuate above its 50 neutral mark, while the MACD is still holding above its red signal line.
An upside reversal may initially pause near the 23.6% Fibonacci level of the latest up leg at 105.00 before gearing towards the 200-day SMA at 105.55. A successful correction higher could extend towards the 106.00 number, while beyond that, the next target could be the 106.67 – 107.00 restrictive region.
Should the bears drive below the 20-day SMA currently at 104.30, piercing the surface of the Ichimoku cloud too around 104.15, the focus will turn to the 50-day SMA at 103.95. Running lower, the pair would aim for a rebound near the broken descending trendline and the bottom of the cloud at 103.45.
In brief, USDJPY seems to have some bullish fuel left in the tank despite its recent pullback. A bounce above 105.00 could bring the bulls back into play, while a close below 104.30 could strengthen selling interest.
