USD/JPY hovers above a key trendline

USD/JPY is trying to record a green candle as it continues to range trade and to respect the aggressive December 28, 2023 ascending trendline. It remains a tad below the October 3, 2023 high at 150.15, a level that appears to provoke verbal interventions from Japanese officials.

In the meantime, the momentum indicators are mostly mixed. More specifically, the Average Directional Movement Index (ADX) appears uninterested in the recent upleg as it continues to hover in trendless territory. The RSI continues to trade comfortably above its 50-midpoint and, more importantly, the stochastic oscillator remains stuck in its overbought (OB) territory. It is edging lower, but it needs a more forceful move in order to break below its OB area and send a bearish signal.

Should the bulls remain confident, they could try to overcome the October 3, 2023 high at 150.15. USD/JPY bulls could then stage a rally towards the October 21, 2022 high at 151.94 and, if successful, open the door to a new 30-year high.

On the flip side, the bears are keen to push USD/JPY below the December 28, 2023 ascending trendline and then test the support set by the 146.65-147.71 area, which is populated by the 78.6% Fibonacci retracement of the October 21, 2022 - January 16, 2023 downtrend, the August 11, 1998 high and the 100-day simple moving average (SMA). Even lower, the bears could then lead USD/JPY towards the 144.99-145.54 region, provided they overcome the 50-day SMA at 146.20.

To sum up, USD/JPY bulls are keen to record another upleg, but they need stronger support from the momentum indicators and to avoid provoking the Japanese authorities.