USD/JPY rallies above long-term resistance trendline; 110 level in focus.
USD/JPY finally climbed above the strong resistance trendline that has been capping upside corrections since mid-September 2018 and questions are rising now about whether the market can sustain the break in the coming sessions.
The positive slope in the RSI, which runs comfortably above its 50 neutral level is painting a rosy picture for short-term trading. However, with the Stochastics searching for a bearish cross in the overbought area, it is reasonable to believe that the rally may appear short-lived.
The 110.00 number is the nearest resistance that could reject any attempt higher. If not and the price extends positive momentum, 110.70 could take over ahead of the 111.40 level.
On the flip side, a downside reversal below the descending trendline could bring the 109.00 level back into view. Should it fail to hold, the 50% Fibonacci of the down-leg from 112.39 to 104.44 near 108.40 would be the next target, while a steeper decline could also reach the 107.80-107.48 support area, where any violation would raise fears over a down-trending market.
In the medium-term window, the sentiment is turning positive following the break above 109.50 and the key resistance trendline which re-activated the uptrend off the 34-month low of 104.44. A closing price above 110.00 would confirm an outlook reversal.
In brief, USD/JPY is facing upside pressure above the long-term descending trendline, with buyers waiting for a decisive close above 110.00 to restore optimism over an up-trending market in the medium-term timeframe.
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