USDJPY has been hovering around the 200-day moving average (MA) over the past week as it struggles to regain upside momentum after falling by around 9% from December’s 10-month high. The near-term bias is bearish as, despite moving higher in the past two days, the RSI remains well below the neutral 50 level at 35.
For the current uptrend to continue, the pair would first need to overcome the 200-day MA at around 108.90 as it’s been preventing daily closes above it during the past week. Further gains could see prices finding resistance around 110.20, which is the middle Bollinger band, followed by the 50-day MA at just above the 112 level. A break above the 50-day MA would help shift the bearish bias to a bullish one.
However, should the upside momentum deteriorate again, support will likely come from the lower Bollinger band at around the 108 handle. The lower Bollinger band has been acting as a support barrier during the latest downtrend. A clear drop below the lower Bollinger band would therefore indicate a strengthening of the downside bias and would open the way towards the 106 level as the next key support area.
In the longer-term picture, the outlook remains neutral but is in danger of turning bearish if price action fails to hold above the 200-day MA.
Origin: XM
