USD/JPY Continues Upside Momentum to Test Key 103.70

USD/JPY (daily chart as of December 2, 2013) broke out above the medium-term resistance (prior support) line (green line on chart) on November 21 (arrow 2 on chart), with a candlestick that had almost no upper or lower shadows attached. This is referred to as a white Marubozu, which indicates dominant buying pressure.

Price then continued the upside momentum to move higher, with only a small retreat from around 101.90 on November 25 to 101.10 on November 26. This occurred without even retesting the mentioned resistance/support line before another bullish candlestick occurred on November 27 (arrow 3 on chart). Based on recent price behavior, it appears that the currency pair is making a directional move.

The 103.70 mark (May 22 high) is the key level to watch for the following trading sessions. Price may retreat from 103.70 if it is unable to keep up the recent upside momentum. If price can finally clear the 103.70 barrier, the prior strong uptrend may resume. However, if 103.70 serves as strong resistance, more consolidation should be expected ahead.

Support levels below:
1st support: 101.10 (November 25 and November 26 low)
2nd support: daily EMA 50
3rd support: 96.95 (October 25 low) or daily EMA 200

Resistance levels above:
1st resistance: 103.70 (May 22 high)
2nd resistance: monthly EMA 200