USD/JPY Price Analysis: Retreats from six-year high, further downside hinges on 118.40 break

• USD/JPY snaps eight-day uptrend while easing from the highest levels since February 2016.
• Overbought RSI, bearish MACD signals hint at extended pullback.
• Two-week-old ascending trend channel keeps buyers hopeful, 50-SMA offers extra barrier for sellers.

USD/JPY bulls take a breather around a six-year high, down 0.08% intraday around 118.65 during Thursday’s Asian session.

In doing so, the yen pair prints the intraday loss for the first time in nine days while stepping back from a resistance line of a two-day-old rising channel.

Given the overbought RSI and downbeat MACD signals, USD/JPY is likely to remain in the bearish consolidation mode.

However, the support line of the immediate channel and Tuesday’s top restricts the quote’s nearby declines of around 118.40.

Following that, the lower line of a broad rising channel from March 03, close to 117.30, will test the USD/JPY bears. It’s worth noting that the 50-SMA level of 116.83 acts as the last defense for the short-term buyers of the pair.

On the contrary, the upper line of the aforementioned channels will limit the immediate upside of USD/JPY near 119.10 and 119.25.

In a case where USD/JPY remains firmer past 119.25, the 120.00 psychological magnet holds the gate for a rally targeting the January 2016 peak of 121.68.

USD/JPY: Four-hour chart

Trend: Further pullback expected