• USDJPY hits key Fibo retracement level

• But momentum indicators still point to weakness

• A break above 161.35 could pave the way towards 161.65

• A slide below 160.35 may invite more bears

USDJPY traded higher today after it triggered some buy orders near the 160.35 barrier and the 23.6% Fibonacci retracement level of the short-term uptrend that began back on June 4. That said, although the pair is still trading above the trendline drawn from the low of that day, some resistance zone must be broken for the uptrend to resume.

Both the RSI and the MACD corroborate the view that it is too early to start examining a trend continuation. The former has turned back below its 50 line, while the latter, although it is showing signs of bottoming, remains below both its zero and trigger lines.

If the bulls are willing to recharge and take the pair above the 161.35 zone, then they may be tempted to test the 161.95 area, marked by the high of July 3. A break higher would take the action into territories last tested back in December 1986 and may encourage advances towards the 163.00 zone, or the psychological area of 165.00.

On the downside, a dip below the crossroads of the aforementioned trendline and the 160.35 level may encourage the bears to add to their positions. A first support may be offered by the 38.2% Fibo level at 159.10, the break of which could allow declines towards the 50% retracement zone at around 158.20.

To sum up, USDJPY hit support at a key Fibonacci retracement level of a prevailing uptrend. However, it is too early to call for a trend resumption as several key resistance zones need to be breached.