USDJPY has been trading in a broad range during the past 7 months, roughly between 108.00 and 114.00. In the shorter time frame, the pair has turned neutral after a bullish run took it to the top of the longer-term range.
Strong resistance at the October 27 high of 114.45 needs to be broken in order to indicate the start of a new bullish phase and target the next major highs at 115.52. and then 118.60.
A drop below Tuesday’s low of 112.95 would turn the focus to the 200-day moving average at 111.72. Breaking below this would bring further weakness and open the way to the bottom of the range at 108.00.
USDJPY is expected to remain neutral in the 112.95-114.45 range in the short-term but price signals are leaning towards bullish, suggesting that risk is tilted to the upside. Technical indicators such as RSI and MACD are in their respective bullish territories, although lacking momentum. The Ichimoku cloud analysis is also bullish. The market is above the cloud, while the Tenkan-sen and Kijun-sen lines are positively aligned.
