USD/JPY traded slightly higher today, but it still remains below the downside line drawn from the peak of January 4th. At the same time though, the rate is still trading above the upside support line taken from the low of December 3rd. Although the latter line is a bit longer, and makes the upside scenario more likely, we prefer to take the sidelines for now.
In order to get confident on the upside, we would like to see a clear break above the 115.45 barrier, and the downside line taken from the high of January 4th. This could initially target the high of January 11th, at 115.70, the break of which could carry extensions towards the peak of January 7th. If the bulls are not willing to stop there either, we could see them targeting the high of January 4th, at 116.33.
Taking a look at our short-term oscillators, we see that the RSI lies slightly below 50, but points flat, while the MACD is negative, but slightly above its trigger line. It points flat as well. Both indicators detect diminishing downside speed and that’s why we prefer to stand pat for now. We prefer to see a clear technical break on our chart, but also clearer momentum signals.
On the downside, we would like to see a clear break below 114.50 before we start examining a bearish outlook. This could confirm the break below the upside line taken from the low of December 3rd, and could initially target the 114.30 barrier. The next support is at 114.03, marked by the low of December 22nd, the break of which could carry extensions towards the 113.75 area, defined by the inside swing high of December 20th. If the bears are not willing to stop there either, a break lower could pave the way towards the low of that day, at 113.30.
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