USDJPY has been recording a stunning bullish rally since it hit a 16-month low of 104.60 on March 23. The pair extended its run earlier this week recording a fresh three-month high near the 110.00 psychological level. However, during today’s early session the pair is trading slightly lower paring some gains.
From the technical point of view, the price is approaching the 200-day simple moving average near 110.20, which is acting as strong resistance in the medium-term, while it is developing well above the 20- and 40-SMAs in the short-term. The RSI indicator is running out of steam as it is sloping down around the 70 level, while %K line of the stochastic oscillator is posting a bearish cross with the %D line in the overbought zone, signaling bearish pressure in the price action.
After the bounce off the 38.2% Fibonacci retracement level of 110.00 of the downleg from 118.60 to 104.60, there is a possibility of bearish movement until the next immediate support of 108.20. If the price continues the downward tendency it could open the way towards the 107.80 barrier.
On the flip side, if prices successfully surpass the 38.2% Fibonacci mark could reinforce the bullish move and drive the pair until the 110.50 resistance level taken from the peak on January 18. A jump above the aforementioned obstacle could push the price further up towards 115.50, which holds near the 50.0% Fibonacci.
As a side note, the pair has been consolidating within a downward sloping channel since December 2016 and touched the lower boundary at the end of March, creating a 16-month low of 104.60.
