USD/JPY has been trading in a sideways mode since June 4, between 109.23 and 109.80. However, in the bigger picture, it continues to hover above the upside support line taken from the low of Apr. 23, which keeps the near-term outlook cautiously positive.
However, in order to get confident on a trend continuation, we would like to see a break above 109.80. The bulls may then get encouraged to push towards the high of June 3rd, at around 110.33, or the 110.55 hurdle, marked by the high of Apr. 6. If they are not willing to stop there, then we could see upside extensions towards the 110.95 territory, defined as a resistance by the peak of Mar. 31.
Taking a look at our short-term oscillators, we see that the RSI lies somewhat flat near its 50 line, while the MACD stands near both its zero and trigger lines. Both indicators detect a lack of directional speed, which supports our view to wait for a clear break above 109.80, before we start examining the continuation of the prevailing uptrend.
Now, in order to assume that the bears have gained the upper hand, at least in the short run, we would like to see a dip below 109.05. The rate would already be below the aforementioned upside line, and the bears may initially target the 108.60 area, which supported the price action between May 19 and 25. Slightly lower we have the 108.35 level, which is marked as a support by the lows of May 7 and 11, the break of which could see scope for larger declines, perhaps towards the 107.65 territory, marked by the low of Apr. 26.