USD/JPY Finds Support at 200-Day EMA

USD/JPY (daily chart as of May 22, 2014) rebounded from 100.80 yesterday with a strong bullish candlestick that had a long lower shadow attached to its long white body. Together with the candlestick on May 20, a potential bullish engulfing pattern (gray shadow on chart) formed right at the 200-day EMA.

Price needs to hold the 200-day EMA to confirm the bullish reversal pattern for a possible retest of 102.70/85 resistance, which is a key level to watch. Technically, the pair has not cleared 102.85 since February, with price immediately returning back below 102.85 after each failed break.

Note that the pair is still trading in a large triangle range between the 200-day EMA and the medium-term downtrend line (bold red trend line on chart). Within the large triangle, it appears that the pair is now trading in a large rectangle range between 101.30 and 103.75 (bold blue lines).

Support levels below:
1st support: 200-day EMA
2nd support: 100.60/75 (multiple lows and highs)
3rd support: 99.55 (November 18, 2013 low)

Resistance levels above:
1st resistance: 102.35 (May 13 high)
2nd resistance: 102.70/85 (key resistance level)
3rd resistance: medium-term downtrend line