USDJPY bears managed to fracture the floor around the surface of the broken bullish channel after a three-day battle, pressing the price to a three-week low of 108.74 on Wednesday.
The bearish violation raised the odds for additional downside corrections, with the momentum indicators leaning to the negative side too as the RSI is ready to cross below its 50 neutral level, the MACD keeps decelerating below its red signal line, and the Stochastics seem unable to exit the oversold area.
The 23.6% Fibonacci of the 102.58 – 110.95 up leg is currently blocking the way to the downside around 108.98. Should it give way, the sell-off could stretch towards the 108.35 level. Any close lower would downgrade the bullish outlook to neutral, though traders may not get discouraged until the price pierces the bottom of the channel, where the 50-day simple moving average (SMA) and the 38.2% Fibonacci of 107.76 are currently positioned.
On the upside, the 109.70 – 110.00 area and the red Tenkan-sen line have been quite restrictive over the past week, therefore a decisive step above this zone is likely required for a bounce towards the crucial resistance region of 110.65 – 111.00. Higher, the pair may again attempt to close above the 111.33 barrier with scope to challenge the 2020 peak of 112.21.
Origin: XM
