USD/JPY traded somewhat higher yesterday, after it hit support at the upside support line taken from the low of December 3rd. However, the rate is still trading below the key barrier of 113.95, which has been preventing the rate from moving higher since November 29th. With that in mind, we prefer to wait for a move above that key zone before aiming for higher areas.
If indeed the bulls decide to overcome that hurdle, we could see them climbing towards the 114.55 barrier, marked by the high of November 19th and the inside swing low of November 23rd. Slightly higher lies the 114.85 zone, which is marked by the inside swing low of November 24th, the break of which could carry extensions towards the peak of the same day, at 115.50.
Shifting attention to our short-term oscillators, we see that the RSI traded higher after hitting support at the 50 line, while the MACD lies slightly above both its zero and trigger lines. Both indicators detect upside speed and support somewhat the notion for this exchange rate to drift a bit higher. However, we stick to our guns that we would like to see a break above 113.95 first.
The move that could turn the picture negative is a dip below 113.20. It will not only confirm the break below the upside line taken from the low of December 3rd, but also a forthcoming lower low on the 4-hour chart. The bears may then get encouraged to dive towards the low of November 30th and December 3rd, at 112.55, the break of which could extend the fall towards the 112.08 zone, marked by the inside swing high of September 30th. If that area is not able to stop the decline either, then we could see the rate falling towards the low of October 8th, at 111.50.
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