USD/JPY traded higher yesterday, after it hit support near the 105.50 level and now looks to be heading for a test near the 106.45 resistance. The pair continues to trade below the downtrend line taken from the peak of the 8th of January, but also above a short-term upside support line drawn from the recent low of the 2nd of March. Therefore, we prefer to take the sidelines for now, and wait for a break of one of those two lines.
A clear break above the aforementioned downtrend line could pave the way for our next resistance barrier of 107.20, marked by the peak of the 1st of March. On the other hand, a dip below the recent short-term upside support line could aim for another test near the support levels of 105.50 or 105.25.
Shifting our attention to our short-term oscillators, we see that the RSI has just poked its nose above its 50 line, while the MACD lies above its trigger line and looks ready to overcome the zero line. These indicators suggest that the rate may continue trading north for a while more, at least for another test near 106.45.
Having said all these though, bearing in mind that USD/JPY continues to trade below the lower bound of the prior medium-term sideways range that contained the price action from the 15th of March until the 13th of February, we see a negative broader outlook. Even if the pair recovers above the short-term downtrend line drawn from the peak of the 8th of January, as long as such a recovery remains limited below 108.30, the lower bound of the aforementioned range, we would treat is as a corrective phase.
