USD/JPY Reaches 103.70 Medium-Term Target

USD/JPY (daily chart as of December 13, 2013) has continued the recent upside momentum as expected, trading through 103.70 today and touching a high of 103.90. Note that price has been trading well above the daily EMA 20 for more than a month since the breakout above its large trading range (blue converging lines on chart) on November 8, indicating a directional move after the break.

Note also that after price broke out above the medium-term resistance (prior support) line (green line on chart) on November 21 (red arrow on chart) with a long white Marubozu candlestick (which shows dominant buying power), the currency pair has not yet retested the resistance/support line. This was another sign of the strong short-term buying pressure.

The 103.70 mark (May 22 high) is a key level to watch for the following trading sessions. Price may retreat from 103.70 if it is unable to keep up the momentum. If price can clear the 103.70 barrier, recent directional movement could continue and 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: daily EMA 20 or the green support/resistance line

2nd support: 100.60 (September 11 high) or daily EMA 50

3rd support: 100.00 (multiple highs and lows)

Resistance levels above:

1st resistance: 103.70 (May 22 high)

2nd resistance: monthly EMA 200