USD/JPY traded higher on Thursday, breaking above the resistance (now turned into support) barrier of 110.45, marked by Tuesday’s peak, as well as the high of the 2nd of February. The pair has been printing higher peaks and higher troughs within an upside channel since the 23rd of March, while today’s move brought the rate above the medium-term downside resistance line taken from the peak of the 6th of November. Having all these technical signs in mind, we believe that the short-term outlook remains positive.
If the bulls manage to stay in the driver’s seat, then we would expect them to aim for our next resistance territory of 111.20, defined by the peaks of the 22nd and 23rd of January. However, we would like to see a move above 111.45, the high of the 18th of January, before we get confident on larger bullish extensions. Such a move could set the stage for the 112.00 territory.
Looking at our short-term oscillators, we see that the RSI rebounded and just poked its nose above its 70 line, while the MACD lies above both its zero and trigger lines. These indicators detect positive momentum and corroborate our view for further advances, at least towards 111.20.
On the downside, we would like to see a decisive dip back below the round figure of 110.00 and the lower end of the aforementioned channel before we start examining the case of a short-term trend reversal. A dip below 110.00 could initially aim for the 109.55 level, the break of which could extend declines towards our next support of 109.20.
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