USD/JPY hovers just below 110 level; death cross awaited.
USD/JPY has been stubbornly testing the 109.76 key level over the past four days, the level it strongly rejected on August 20 to rally towards an 11-month high of 114.54. The short-term bias looks neutral to positive as the MACD keeps deviating above its red signal line to enter the positive territory and the RSI continues to flirt with its 50-neutral mark.
A decisive close above 109.76 would open the door for the 50% Fibonacci of 110.48 of the down-leg from 114.54 to 106.45. If the bulls manage to climb higher, resistance could next come in the crossroads of the 50-day simple moving average (MA) and the 61.8% Fibonacci, at 111.44. Another winning battle at this point could add more buyers into the market, sending the pair probably up to the 112.20 key level.
In the negative scenario, the price could cross back below the 38.2% Fibonacci of 109.53 to meet support at 109, where the 20-day MA is currently placed. Steeper losses may also target the 23.6% Fibonacci of 108.36, while another leg lower could pierce the 107.76-107.50 area captured between the lows on January 10 and January 4.
Turning to the medium-term picture, USD/JPY maintains in a bearish profile as long as the downfall from the 114.54 peak remains active. Chances for a recovery, though, seem to be decreasing as the 50-day and the 200-day MAs are coming closer to register a bearish cross after a year.
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