FX.co ★ USD/JPY poised to fly higher

USD/JPY shows positive signs and hints a potential upside movement after its current extended range. Nikkei's rally and a USDX's rebound could help the pair to take out the immediate upside obstacles.

The pair is somehow expected to reverse and increase after confirming the breakout above the downtrend line. Today, the US is to release the CPI and Core CPI data, better than expected figures should push the pair higher.

USD/JPY is located at half of the extended range and is somehow expected to jump above the median line (ML) after failing to stabilize under the Pivot Point (106.01). I believe that a valid breakout above the ML will confirm further gains and maybe an upside breakout from the current sideways movement, above 107.00 psychological level.

The downtrend line retest suggests a broader upside movement. This scenario could be validated by a valid breakout above the median line (ML). The upside could be invalidated by a drop below the 50% Fibonacci line and after making another lower low.

• USD/JPY Trading Tips

A bullish closure above the median line (ML), 106.55, followed by a consolidation suggests buying with a potential target at the upper median line (UML), around 108.50 level.

Dropping below 105.30 could attract more sellers and could confirm a deeper drop.