USDJPY has struggled in a narrow range over the last few daily sessions with upper boundary the 110.85 resistance level and lower boundary the 38.2% Fibonacci retracement level of the downleg from 118.60 to 104.60, around 109.95. The price is set to complete the second bullish day in a row after the bullish crossover within the 20- and 40-simple moving averages (SMAs) in the daily timeframe.
From the technical point of view, the technical indicators are endorsing the scenario for further upside potential move. The price remains above the significant 200-day SMA signaling for bullish pressure. The RSI indicator is sloping upwards above the threshold of 50, while the MACD oscillator lies near its trigger line and is rising with weak momentum above the zero line.
Should the market extend gains and surpass the 110.85 resistance level support could be met between the 111.40 resistance level and the 50.0% Fibonacci mark near 111.60. A leg above this area could send prices towards the 112.00 psychological barrier, which currently fluctuates near the descending trend line of the longer-term falling sloping channel. In case of an upside violation of this level could shift the bearish bias to bullish.
Conversely, if the pair bounces down, immediate support could come at the 38.2% Fibonacci of 109.95, which stands near the 20- and 40-SMAs. Steeper decreases could drive the pair south towards the 108.65 hurdle.
Broadly, USDJPY has been trading within a downward sloping channel since December 2016, while in the short-term the market holds in an ascending movement after the rebound on the 104.60 support.
