USD/JPY is showing reversal signs. After the rally from 107 to 113.50, price has stopped right at the trend-line resistance from previous highs. At the same time, the RSI has hit its own trend-line resistance and reversed in previous cases as well. With indicators pointing that the 2nd high we made today around 113.15 is a failed attempt for new highs, the chances that a new downward move has started have increased.
A rejection here will be a bearish sign. Oscillators justify a pull back at least toward the 38% Fibonacci retracement. Taking a closer look we find the first important short-term support at 112 and next at 111.15. Breaking below 111.15 will open the way for the 61.8% Fibonacci retracement at 109.65.
The risk-reward at the 112.50-113 area favors bearish positions. That's why I'm bearish here, expecting at least a move toward the 38% Fibonacci retracement. However the most probable scenario is for price to move toward 110-109. There is also a chance that the selloff will be bigger and the price could go toward 104.
But for now, it's too early to talk about that scenario.