- USD/JPY was seen consolidating its recent gains to three-week tops, above mid-105.00s.
- The set-up favours bullish traders and supports prospects for further appreciating move.
- Only a sustained break below the 105.00 round-figure will negate the constructive outlook.
The USD/JPY pair now seems to have entered a bullish consolidation phase and was seen oscillating in a range around the 105.60 region, just below three-week tops set earlier this Tuesday. Given that the overnight dip was bought into near the 105.40-35 confluence support, the bias seems tilted firmly in favour of bullish traders and supports prospects for additional gains.
The constructive outlook is further reinforced by the fact that oscillators on hourly charts have been gaining traction and have also recovered from the negative territory on the daily chart. Hence, some follow-through positive move beyond the 106.00 round-figure mark, towards testing the next major hurdle near the 106.25-30 supply zone, now looks a distinct possibility.
The mentioned barrier is followed by 100-day SMA, around the 106.60-65 region, which if cleared will set the stage for an extension of the recent recovery from the 104.00 mark.
On the flip side, the 105.40 area might continue to act as immediate strong support, below which the USD/JPY pair might turn vulnerable to slide back to the key 105.00 psychological mark. The latter coincides with 200-hour SMA and should act as a strong near-term base for the major. A convincing breakthrough will now be seen as a fresh trigger for bearish traders.
USD/JPY 1-hourly chart
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Technical levels to watch
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