USDJPY has powered back from its December low, crossing above the 50- and 200-period simple moving average (SMA). Moreover, the 50-period SMA has crossed above the 200-period SMA, reviving hopes of a sustained bullish outlook. However, the pair is currently trading near its upper Bollinger Band, indicating that an immediate downward movement should not be ruled out.
Short-term momentum indicators are supporting a negative bias as the RSI is located above its 70 overbought region, signalling that an imminent pullback is not out of the equation. Also, the MACD is found above zero but below its red signal line, which could indicate that the recent positive bias might be losing steam.
Should the bulls maintain control, initial resistance might be found at the 115.51 level. Crossing above that point could strengthen the pair’s positive momentum, opening the door towards the end-December 2016 low at 116.04, before buyers shift their attention towards the 2016 mid-December low at 116.54.
On the flip side, if the price breaks below the 114.94 level, immediate support might be found at the region which includes the 50-period SMA and the 114.66 obstacle. A decisive move below the latter could pave the way towards the 114.26 hurdle, before sellers eye the 200-period SMA currently found at 114.05.
In brief, the overall outlook for the pair is bullish despite touching its upper Bollinger Band, which raises the immediate risk to the downside. For sentiment to change, sellers would need to drive the price below the 50-period SMA.
