USDJPY remains struck within the Ichimoku cloud after falling from a high of 114.36 hit on May 11. From here prices reversed lower due to reaching overbought levels as indicated by the RSI rising above 70.
There is strong resistance in the area between the top of the cloud at 111.80 and the key 112-yen level. Support is being provided by the 50% Fibonacci retracement level of the upleg from 108.12 to 114.36. This level lies at 111.23 and is also where the 50-day moving average is currently converging on. USDJPY is neutral in the near-term, trading in a range between these support and resistance levels. RSI is not showing any clear direction, suggesting there is a consolidation phase in the market at the moment.
A break above the cloud would target 113.00 with scope to rise further to re-test the 114.36 high and then resume the uptrend that started from 108.12
Alternatively, a breakdown of immediate support at 111.23 could lead to a deeper decline towards next support at the bottom of the cloud at 110.00 and confirm a top at 114.36, turning the bias to bearish.
Looking at the medium-term picture, the market structure remains bullish as long as USDJPY remains above the 200-day moving average and above the 50% Fibonacci level.
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