USD/JPY is at a difficult spot right now. On one hand, it continues to trade above two of its upside lines: a medium-term tentative one, taken from the low of August 25th, and a slightly steeper short-term line, drawn from the low of October 4th. But on the other hand, the pair is struggling to push above its 108.90 barrier, which is, so far, keeping the rate down. Despite the fact that the short-term trend is still to the upside, we will still wait for a clear break above the 108.90 hurdle, before examining higher areas. This why for now, we will stay cautiously-bullish.
As mentioned above, a strong push above the 108.90 barrier, marked near the highs of October 15th and 17th, would confirm a forthcoming higher high and more buyers could join in. This is when USD/JPY might travel to the 109.30 obstacle, a break of which could send the rate to the 109.92 area, which is the high of May 30th.
Our oscillators, the RSI and the MACD, are currently flat. Both indicators are not giving us any clear indication in which direction they would like to move, at least in the near term. This is why we will not put much emphasis on their readings at this point in time.
Alternatively, if the aforementioned short-term upside line fails to provide support for the pair, its break and a rate-drop below the 108.25 hurdle, which is the current low of this week, could attract a few more sellers into the game. USD/JPY might then slide to the 108.00 obstacle, a break of which may send the rate further down. This is when we will target the previously-discussed medium-term upside line, or the 107.63 level, marked by the low of October 1st and near the high of October 9th.
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