USD/JPY Pauses before Potential Further Upside Move

USD/JPY (daily chart as of April 2, 2014) broke out above the key resistance level of 102.85 with two strong up sessions on March 31 and April 1. This breakout was stronger than the one that occurred on March 6 and 7, which involved a weak candlestick that had a very long upper shadow attached (two gray shadows on chart for comparison).

The upside momentum should continue based on such a strong breakout. Note that current price is now facing another major resistance level (line 2 on chart). Some corrections may be expected below that resistance line before further upside movement. The pair needs to hold 102.70/85 to validate the short-term bullish outlook.

If price breaks down below 102.70/85, it could seek further support at the daily EMA 100 and potentially the lower border (line 1) of the large trading range (between line 1 and line 2). Economists expect more jobs added in January, backing the case for the Fed to raise interest rates. Non-Farm Payrolls data is scheduled to be released on Friday, April 4.

Support levels below:
1st support: 102.70/85 (key support level)
2nd support: daily EMA 100
3rd support: support line 1

Resistance levels above:
1st resistance: resistance line 2
2nd resistance: 104.80 (January 22 high)
3rd resistance: 105.45 (January 2 high)