USDJPY has been in a consolidation mode over the last three months with an upper boundary at the 109.83 resistance level and lower boundary at the 106.57 support. The price has not improved its bullish move that started after the bounce off the 41-month low at 101.15 and it currently stands beneath the short-term moving averages (SMAs).
Looking at the technical indicators, the RSI is losing momentum below the neutral threshold of 50, while the MACD dropped under the trigger and zero lines, both suggesting a potential downside move.
If the price declines below the 50.0% Fibonacci retracement level of the upward wave of 101.15 to 111.70 at 106.43, it could flirt with the 106.00 psychological mark. In case of a harder push, the bears could find support at the 61.8% Fibo of 105.19 and then a stronger downside rally could meet the 41-month low of 101.15, shifting the bias to bearish.
In the opposite scenario, a rebound on the 50.0% Fibo of 106.43 could send prices until the 40- and 20-day simple moving averages (SMAs) around 107.35 and 107.66 respectively, which encapsulates the 38.2% Fibo. Above that, the flat 100-day SMA at 108.37 could be a crucial line for traders ahead of the 23.6% Fibo at 109.20, which overlaps with the upper Bollinger band.
Summarizing, USDJPY is looking to lose steam as it failed several times to successfully surpass the 109.00 – 110.00 key area. A jump above the ten-week high could give the green light for more increases.
