USDJPY has been developing in an upside sloping channel over the last month, creating a fresh five-month high of 106.21.
From the technical viewpoint, the RSI is flirting with the overbought territory, while the MACD is pointing up above its trigger and zero lines. Both are suggesting an overbought market and a downside retracement is possible. Also, the 20- and 40-day simple moving averages (SMAs) completed a bullish crossover in the previous sessions.
Any advances above the immediate resistance, which is the 38.2% Fibonacci retracement level of the down leg from 112.20 to 102.60 at 106.25, could send the pair until the 107.00 handle, this being the high in August 2020. More gains could open the door for investors to hit the 50.0% Fibonacci of 107.38 and then the 108.15 barrier.
On the other hand, a bearish correction of the latest increase, could take the price towards 105.70 before meeting the 200-day SMA at 105.50. Beyond this line, the 23.6% Fibonacci of 104.85 could be the next target ahead of 104.40.
Briefly, in the short-term timeframe the price is in bullish mode, however, in the long-term the market is still bearish-to-neutral and any advances above the 61.8% Fibonacci of 108.50 may shift this view to the upside.
