USD/JPY Hits Resistance Slightly Below 110.00

USD/JPY rallied yesterday, breaking above the key resistance zone of 109.70, which prevented the rate from moving higher on May 3^rd and 12^th. However, the advance was stopped slightly below the 110.00 zone, specifically, at 109.95, which acted as a resistance on April 9^th. Overall, the rate continues to trade above the tentative upside support line drawn from the low of April 23^rd, and thus, we would consider the near-term outlook to be positive.

The move above 109.70 has confirmed a forthcoming higher high on both the 4-hour and daily charts, but before we get confident on larger advances, we would like to see a decisive break above 109.95. Something like that may pave the way towards the peak of April 6^th, at 110.55. However, before this happens, we may see a retreat, perhaps for the rate to challenge as a support the 109.30 area.

This cautiousness derives from our short-term oscillators, which detect slowing upside speed. The RSI shows signs of topping above its 70 line, while the MACD, although above both its zero and trigger lines, shows signs of that it could top as well.

In order to totally abandon the bullish case, we would like to see a dip below the 108.60 territory, which provided strong support between May 19^th and 25^th. This would also take the rate below the aforementioned upside line and may initially target the 108.35 barrier, marked by the lows of May 7^th and 11^th. Another break, below 108.35 could carry larger bearish implications, perhaps paving the way towards the 108.00 zone, the break of which could extend the fall towards the low of April 26^th, at 107.65, or the low of April 23^rd, at 107.50.

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