Seeks to extend the move above the 105.00 level

• USD / JPY is moving higher and looking to extend the move above the 105.00 level.
• The positive movement stops near the resistance of a multi-day bullish channel.
• Oscillators on the daily chart warrant some caution for aggressive bulls.

The USD / JPY pair has risen to fresh daily highs at the start of the American session on Monday, with the bulls now looking to take advantage of momentum above the key psychological level of 105.00. The aforementioned level marks the upper limit of an uptrend channel almost a week old and if it is decisively overcome it will be seen as a new trigger for the bulls.

Meanwhile, technical indicators on the 1-hour charts have been gaining positive ground and have bolstered the pair’s constructive outlook. However, the oscillators on the daily chart, while rebounding from bearish territory, have yet to confirm the bullish bias and warrant some caution before positioning for any short-term bullish moves.

That said, a sustained move above that region could trigger a new short-hedging move and push the USD / JPY towards the 105.50 area, with intermediate resistance near the 105.30 region.

On the other hand, the 104.80 region now appears to have emerged as immediate support, below which the USD / JPY pair could pull back to retest the daily lows, around the 104.65 region. This last level coincides with the trend channel support and should now act as a key point for investors and help determine the direction of the pair in the short term.

A convincing breakout of this level will negate any short-term positive bias and make the USD / JPY vulnerable to accelerate the slide towards the 104.35-30 region. The bears could then aim to challenge the September monthly lows near 104.00. Some subsequent selling should pave the way for an extension of the bearish move towards the 103.10-103.00 zone.

USD / JPY 1 hour chart