USD/JPY Price Analysis: Bulls eyeing a move beyond 105.00 mark on positive vaccine news
|- Positive COVID-19 vaccine news prompted some aggressive short-covering around USD/JPY.
- A four-month-old descending trend-line might cap any subsequent move beyond the 105.00.
- Mixed technical indicators on daily/1-hourly charts further warrant caution for bullish trades.
The USD/JPY pair witnessed some aggressive short-covering move on Monday and was being supported by the latest optimism over a potential vaccine for the highly contagious coronavirus disease. The strong intraday momentum pushed the pair to three-day tops, with bulls now awaiting some follow-through buying beyond the key 105.00 psychological mark.
From a technical perspective, any subsequent positive move is likely to confront a stiff resistance near a four-month-old descending trend-line. The mentioned barrier is currently pegged near the 105.35-40 region, which coincides with last week's swing highs and should now act as a key pivotal point for the USD/JPY pair's near-term trajectory.
Meanwhile, technical indicators on the daily chart are yet to catch up with the strong intraday recovery move and already flashing overbought conditions on the 1-hourly chart. The set-up warrants some caution for bullish traders and positioning for any further appreciating move, making it prudent to wait for a sustained move beyond the trend-line hurdle.
On the flip side, the 104.45-30 congestion zone now seems to protect the immediate downside. Failure to defend the said support level will negate prospects for any further positive move, instead prompt some fresh technical selling. The USD/JPY pair might then turn vulnerable to slide back below the 104.00 mark and accelerate the fall towards the 103.35 region.
USD/JPY daily chart
Technical levels to watch
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