Bounces back to 200-DMA/ascending trend-line confluence support break-point

USD/JPY stages a goodish bounce from 61.8% Fibo. level and fills the weekly bearish gap.
The technical set-up warrants some caution before placing any aggressive bullish bets.

The USD/JPY pair closed the weekly bearish gap opening to near four-month lows and is currently placed near the top end of its daily trading range, around the 108.25-30 region.

Extremely oversold conditions on hourly charts seemed to be a factor that prompted some short-covering move from the 61.8% Fibonacci level of the 104.85-112.19 positive move.

The pair hs now moved back closer to a confluence support breakpoint – comprising of the very important 200-day SMA and an ascending trend-line extending from early-October swing lows.

A sustained move back above the mentioned support-turned-resistance might provide an additional boost and lift the pair towards another confluence hurdle near the 109.25 region.

The latter coincides with 100-day SMA and 38.2% Fibo. level, which if cleared should pave the way for additional gains amid a modest rebound in the global risk sentiment.

Meanwhile, oscillators on the daily chart maintained their bearish bias and are still far from being in the oversold territory, warranting some caution before placing aggressive bullish bets.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have already bottomed out and positioned for any further near-term recovery.