USD/JPY technical analysis: Bulls await a sustained breakthrough 106.70 key barrier
- The USD/JPY pair rallied over 30-pips from the early European session lows and is currently placed at the top end of its daily trading range, challenging 100-period EMA on the 4-hourly chart.
- The said region has been acting as a strong resistance over the past 1-1/2 week and should act as a key pivotal point, which might help traders to determine the pair's near-term trajectory.
Meanwhile, technical indicators on the daily chart have been recovering from the bearish territory and gaining some positive traction on hourly charts, supporting prospects for an extension of the recent recovery move from multi-month lows set last week.
Sustained breakthrough the 106.70 region - also coinciding with 38.2% Fibo. level of the 109.32-105.05 recent downfall - will reaffirm the bullish bias and set the stage for a move back towards reclaiming the 107.00 handle en-route the 107.20 resistance zone.
The momentum could further get extended towards mid-107.000s en-route 61.8% Fibo. level - around the 107.70-75 region - which if cleared will negate any bearish bias and lift the pair further beyond the 108.00 handle - towards the 108.45-50 supply zone
On the flip side, the 106.20-15 horizontal zone now seems to have emerged as an immediate strong support, below which the pair might turn vulnerable to head back towards challenging the 105.00 handle with some intermediate support near the 105.65 region.
USD/JPY 4-hourly chart