USD/JPY Price Analysis: Refreshes multi-month tops near mid-106.00s, bullish bias remains

• USD/JPY attracted some dip-buying on Friday and turned positive for the straight session.
• The set-up supports prospects for a move towards the channel hurdle near the 105.75 area.
• Any weakness below the 106.00 mark might still be seen as an opportunity for bullish traders.

The USD/JPY pair reversed an early dip to the 105.85 region and turned positive for the fourth consecutive session on Friday. The momentum pushed the pair to fresh five-month tops, around mid-106.00s during the first half of the European session.

Looking at the technical picture, the recent move up from YTD lows has been along an upward sloping channel. The ascending trend-channel formation points to a well-established short-term bullish trend and supports prospects for additional gains.

The constructive outlook is reinforced by oscillators on the daily chart, which are holding in the bullish territory and still far from being in the overbought zone. Hence, a subsequent strength towards the trend-channel resistance, near the 106.75 region, looks a distinct possibility.

A sustained move beyond mark a fresh bullish breakout and set the stage for a further near-term appreciating move. The USD/JPY pair might then accelerate the momentum towards the 107.00 mark en-route the next hurdle near the 107.55-60 supply zone.

On the flip side, the 106.00 mark now seems to protect the immediate downside. Any subsequent slide might continue to attract some dip-buying near the 105.85-80 region. This should help limit the fall near the very important 200-day SMA, around the 105.40 area.

The latter is closely followed by the trend-channel support, around the 105.15 region. Failure to defend the mentioned support, leading to a subsequent breakthrough the key 105.00 psychological mark will negate the near-term bullish outlook.

USD/JPY daily chart

Technical levels to watch