USDJPY seems to be completing a retracement near the 107.15 support level and the 100-period simple moving average (SMA), which coincides with the 38.2% Fibonacci level of the up leg from 101.15 to 111.70 at 107.67. The downfall from the one-month high of 111.70 drove the pair inside the Ichimoku cloud in the previous days, creating a bearish crossover within the 20- and 40-period SMAs.
In momentum indicators, the RSI is pointing up after the bounce on the 30 oversold level, while the stochastic is turning higher after the positive cross within the %K and %D lines on the 4-hour chart.
Traders, however, would be more eager to engage in buying activities if the price manages to surpass the 108.34 resistance, where the red Tenkan-sen line is currently placed. If this is successfully breached, then the rally may next rest somewhere between the 23.6% Fibonacci mark of 109.20 and the 20-period SMA at 109.45, while a closure above the latter may be needed to push the price towards the 40-period SMA at 110.00. Higher, the 111.70 resistance could next come in spotlight.
On the flip side, the selling pressure could accelerate again if the market deteriorates below the 107.15 former strong support area. Such a move could next bring the 50.0% Fibonacci of 106.43 in focus, where any violation could trigger sharper losses probably until the 61.8% Fibo of 105.20 and the 105.15 barrier.
In the medium-term timeframe, the pair is in a neutral trend and only a rally above 112.20 – 112.40 would put the market back into a positive path.
