USD/JPY Stalls but is Still Bullish
This week, USD/JPY rallied to a new high on the year at 116.10. After this push, it has stalled, holding below 116.00, though also holding above 115.00. The 4H chart shows a bullish market, but also showed a bearish divergence between price and the RSI. A consolidation was due, and it has already been developing.
Now, in the short-term, we might have some downside risk below 115.00. However, we should expect buyers above 114.00 handle, because the market has been making higher highs and higher lows, and 114.00 was the previous support pivot from last week.
Also, if the RSI approaches 40 and stalls, we should expect a subsequent bullish attempt to test the 116.10 high with risk of breaking higher. Even a break below 113.15 does not necessarily shift away from the bullish trend. If USD/JPY breaks below 112 and a rising trendline from mid-October, then we might consider the pair neutral for the medium-term instead of bullish, though the long-term outlook would still be bullish.
If price action does indeed maintain its current course, we should see it break above 116.10. In the monthly chart we can see some resistance levels ahead. The 119.80-120 area might be the first level of key resistance. Above that, we should also expect sellers at the 124.16 2007-high.