USD/JPY has been trading in a quiet mode lately, staying within the sideways range that’s been containing the price action since March 27th, between the 107.00 and 109.30 hurdles. Thus, although the rate is closer to the lower end of that range, as long as it is trading within the aforementioned boundaries, we will hold a flat stance.
In order to start examining whether the bears have gained the upper hand, we would like to see USD/JPY exiting its range through the lower bound. This would confirm a forthcoming lower low and may allow the pair to tumble towards the 105.15 barrier, or even the 104.55 zone, marked as supports by the lows of March 16th and 12th respectively.
Turning our gaze to our short-term momentum studies, we see that the RSI has been oscillating around its 50 line since last week, while the MACD lies near both its zero and trigger lines, pointing sideways. Both indicators suggest a lack of directional momentum and corroborate our choice to stay sidelined for now.
We would start considering the bullish case only if we see a strong break above 109.30, the upper end of the pre-mentioned range. Such a move may initially open the way towards the psychological territory of 110.00, which if it doesn’t hold either, may allow the bulls to climb towards the 111.70 territory. That territory acted as a strong resistance on March 24th and 25th.
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