USDJPY realized massive gains in the past year, marching to a 32-year high of 151.94 in mid-October. Nevertheless, the pair has been experiencing a prolonged pullback since then, with the price hitting a fresh seven-month low of 127.21 before recouping some losses.
The momentum indicators currently suggest that bearish pressures are subsiding. Specifically, the RSI is ascending steeply but remains below the 50-neutral mark, while the stochastic oscillator is edging higher after posting a bullish cross in the oversold zone.
Should buying pressures intensify, the price could test the recent peak of 131.56, which overlaps with the descending trendline formed from the pair’s recent downside correction. Breaking above that zone, the bulls could aim for 134.50 before the spotlight turns to the December resistance region of 138.10. Even higher, the 142.24 hurdle could prove to be a tough one for the price to overcome.
On the flipside, if the price extends its retreat, the seven-month low of 127.21 might act as the first line of defense. Sliding beneath that floor, the pair could descend to challenge the May low of 126.40. Failing to halt there, the March support of 121.20 may provide downside protection.
In brief, USDJPY appears to be regaining some lost ground despite the completion of a death cross between the 50- and 200-day simple moving averages (SMAs). Hence, downside pressures could intensify in case the descending trendline rejects this latest bounce.