USD/JPY traded in a consolidative manner on Monday, staying below the 110.25 resistance barrier, met on Friday as well. Despite the recovery we saw on Thursday and Friday, the pair continues to trade below the prior upside support line drawn from the low of April 23rd, and thus, we would see decent chances for the bears to take charge again at some point soon.
If they do, we could see them aiming for another test near Thursday’s low of 109.53, the break of which would confirm a forthcoming lower low on the 4-hour chart and perhaps pave the way towards the 109.23 territory, which provided support between June 7th and 9th. If that barrier is not able to halt the slide, then, we will closely monitor the 109.05 zone, marked by the low of May 27th and the inside swing high of May 25th.
Shifting attention to our short-term oscillators, we see that the RSI shows signs of topping slightly below its 50 line, while the MACD, although above its trigger line, remains negative and appears ready to begin topping as well. Both indicators suggest that USD/JPY may start picking up negative speed soon, which supports the notion for another round of selling in the foreseeable future.
Now, in case we see a recovery above 110.82, we will abandon the bearish case. The rate would also be back above the aforementioned upside line and thus, the bears may get encouraged to push the action towards the peak of July 5th, at 111.18. Another break, above 111.18, could see scope for more bullish extensions, perhaps towards the high of July 2nd, at 111.66.
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