USD/JPY Price Analysis: An upside break could be on the cards for next week

USD/JPY 1-hour chart

USD/JPY is up a fair amount from the lows of 104.18 it hit on 31st July. Now the pair looks like it has made a reversal pattern on the hourly chart. This is in part thanks to the non-farm payroll data in the US which beat analyst expectations. The drama is not over as the market is still pausing for breath to see if the US government can get the lastest fiscal stimulus bill over the line by tonight.

Looking closer at the chart and the key feature is the blue trendline. The price has currently stalled at the level and it should be watched on the Sunday night (London hours) open. If the level does break the bulls may look to target the purple horizontal line at 106.36 which was a firm resistance at the beginning of the week on 3rd August. In terms of support the price might lean on the orange trendline which connects the two key wave lows. Beyond that, the red horizontal line at 105.33 has been used twice recently to good effect.

The indicators are looking more bullish now. The Relative Strength Index has hit the positive overbought levels and although a short term pullback may be on the cards, longer-term it could be a good sign. The MACD histogram is firmly green and the signal lines are above the mid-point. Overall, the price may continue to move higher next week but the first hurdle will be the blue aforementioned trendline. 

Additional levels