USD/JPY oversold above strong downside obstacles

The USD/JPY pair retreated a little in the short term, but the bias remains bullish. It was trading at 135.94 at the time of writing. After its rally, a temporary retreat was natural. It could only test and retest the near-term support levels before developing a new bullish momentum.

Fundamentally, the Japanese Retail Sales and Housing Starts came in better than expected, BOJ Core CPI matched expectations, while Prelim Industrial Production came in worse than expected.

On the other hand, the US reported mixed data as well. Still, the USD/JPY sell-off was natural as the CB Consumer Confidence, Goods Trade Balance, Chicago PMI, and Richmond Manufacturing PMI came in better than expected.

Tomorrow, the Japanese Final Manufacturing PMI could remain steady at 47.4 points. Still, the US ISM Manufacturing PMI, Final Manufacturing PMI, Construction Spending, and ISM Manufacturing Prices could really be decisive for the USD.

As you can see on the H1 chart, the rate dropped after failing to stay above yesterday's high of 136.55. Now, it's almost to reach the weekly pivot point of 135.63 which stands as the first downside obstacle.

The median line (ml) stands as a dynamic support. As long as it stays above it, the rate could develop and new bullish momentum. The 135.11 stands as a downside obstacle as well. Only a valid breakdown below the median line (ml) and dropping below 135.11 invalidates an upside continuation.

Testing and retesting the weekly pivot point of 135.63 and the median line (ml), registering only false breakdowns may announce a new bullish momentum. A minor accumulation above the support levels or false breakdowns with great separation should represent a buying signal.