USD/JPY technical analysis: Bulls challenge the top end of one-week old trading range

The USD/JPY pair extended its subdued trading action on Friday and remained well within a narrow trading band held over the past one week or so. The recent range-bound price action constituted towards the formation of a rectangle, suggesting indecision over the pair's next leg of a directional move.
 
Given the recent rebound from multi-year lows and a subsequent breakthrough over five-month-old descending trend-line, the rectangle might still be categorized as a bullish continuation pattern. Bullish technical indicators on hourly/daily charts further add credence to the near-term positive outlook.
 
While a rectangle is usually a continuation pattern, it can also mark a significant trend reversal, warranting some caution before placing any aggressive bets. Hence, it will be prudent to wait for a sustained breakout and some strong follow-through buying in order to complete the bullish pattern.
 
Meanwhile, the positive momentum is likely to confront some resistance near the very important 200-day SMA, around the 109.00-109.05 region, which if cleared decisively will set the stage for a move towards the key 110.00 psychological mark with some intermediate resistance near the 109.30 region – early August swing highs.
 
On the flip side, any meaningful pullback below the 108.40-35 region – marking 50% Fibonacci level of the 112.40-104.45 downfall – might continue to attract some dip-buying interest and help limit the downside near the trend-line resistance break-point, now turned support around the 108.00 round-figure mark.

USD/JPY daily chart