USDJPY Near-Term Upside Seems Capped

Following a retest of 111.00 mark support, the pair has been trending higher alongside a short-term ascending trend-line support and has now cleared its immediate resistance near 113.50 region marking 23.6% Fibonacci retracement level of its sharp fall from Jan. high to lows tested in Feb. From current levels, follow-up strength above 114.00 round figure mark should assist the pair to extend the near-term recovery towards its next major resistance near 115.00 mark. This 115.00 mark resistance comprises of 38.2% Fibonacci retracement level and another short-term ascending trend-line resistance.

When considered in conjunction with each other, the short-term ascending support and resistance trend-lines constitutes towards formation of a bearish Rising Wedge chart pattern on 4-hourly chart. Hence, 115.00 level becomes immediate strong resistance to watch for, which if conquered would negate the bearish formation and open room for further near-term appreciating move. Momentum above 115.00 mark has the potential to lift the pair towards another important resistance confluence near 116.00-116.15 area, comprising of a strong support break point turned resistance zone, 50-day SMA and 50 Fibonacci retracement level.

Meanwhile on the downside, 113.50 level marking the ascending trend-line support, also coinciding with 23.6% Fibonacci retracement level, become immediate level to defend. Failure to hold this immediate support and a subsequent weakness below 113.20-113.00 horizontal support, would confirm the bearish Rising Wedge chart-pattern, thus increasing the pair’s near-term vulnerability. Weakness below 113.00 mark should drag the pair towards 111.75-70 intermediate support before the pair heads back towards retesting the very important 111.00 mark support.