USDJPY started Wednesday’s session with some fatigue after its explosive bullish run hit a wall near the crucial resistance of 113.78 from November 2018.
Following a four-day winning streak, some profit-taking would be normal, with the RSI and the Stochastics endorsing the potential for a downside reversal as the indicators look set to shift south within the overbought area.
The price, however, has comfortably distanced itself above its previous highs of 112.07 and 111.65, building enough space for the bulls to resurface even if a downside correction takes place.
Looking for pivot points, the 113.00 level, which supported yesterday’s rally, could come first into view. Failure to hold above it could see the price decelerating towards the steep ascending trendline currently seen around 112.30 and near the red Tenkan-sen line. Then, a clear close below 112.00 would dampen sentiment, probably strengthening selling pressures towards the restrictive zone of 111.47 – 111.20, where the 20-day simple moving is also positioned.
Long-term traders, however, would not get discouraged unless the pair crosses below the tentative dashed upward-sloping trendline drawn from 2020 lows.
In the event buying forces push the price above the 114.00 resistance, all eyes will turn to the 2018 top of 114.54. The 115.00 mark will be the next target if the rally stretches higher.
Summarizing, USDJPY could give up some gains on profit-taking in the short-term, though only a break below 112.30- 112.00 would reduce confidence on the latest impressive upleg.
