USDJPY is on course for a third straight session of gains, which have taken the pair from below the 105.25 support to a retest of the 20-period simple moving average (SMA) around 105.65 in the 4-hour chart. The momentum indicators are supportive of the bullish picture, with the RSI rising into positive territory above 50, while the stochastic is heading north to overbought zone.
A rally even higher could take the market until the five-month high of 106.20 ahead of the 106.50 resistance, being the high in September 2020.
In case of a downward attempt, USDJPY would likely meet support at the 40-period SMA, currently around 105.50. A break below this line would ease the upside pressure, while a fall below the 23.6% Fibonacci retracement level of the up leg from 102.60 to 106.20 at 105.35 would taken the pair towards the 105.25 support and the ascending line around 105.05. Penetrating the diagonal line to the downside would help turn the short-term bias to a neutral one.
In the near-term, the bullish outlook remains intact with the price remaining above the 200-period SMA and the seven-week uptrend line.
Origin: XM
