USDJPY falls below 109.00; approaches uptrend line

USDJPY is holding losses below 109.00, dropping from the seven-month high of 110.28 and below the 20- and 40-day simple moving averages (SMAs). Also, the pair entered the Ichimoku cloud and is trying to slip beneath the 23.6% Fibonacci retracement level of the up leg from 104.45 to 110.28.

Technically, the price could lose more ground in the short-term as the RSI is changing direction to the downside and towards its 30 mark, while the MACD oscillator keeps weaking below the trigger line and has neared the zero line. However, the stochastics are warning – as are above the oversold zone – of a possible upside correction with the completed bullish crossover between the %K and %D lines.

A decline under the lower surface of the Ichimoku cloud could meet a strong barrier at the 38.2% Fibo of 108.05. A more powerful bearish penetration could open the way for the 107.65 level and the 50.0% Fibo of 107.35.

In the positive scenario, a rebound on the lower surface of the Ichimoku cloud (108.80), may keep the pair on the uptrend started from the 104.45 low in the end of August. Continuing north, resistance could be encountered at the seven-month high of 110.28. Higher, the price could flirt with the 110.65 and the 111.00 critical levels, identified by the tops on May 2019

In brief, USDJPY could lose further steam in the short term, while in the medium-term the pair continues to hold a positive outlook as it remains above the rising trend line.