Technical Analysis – USDJPY extends bullish breakout ahead of nonfarm payrolls

USDJPY continues to build its positive trajectory above the broken descending trendline, registering an almost three-month high of 105.33 on Thursday.

There is no key obstacle in sight until the 105.45 – 105.65 region; therefore, expectations are for the rally to see further extension in the near-term as the momentum indicators in the four-hour chart keep promoting the bullish appetite in the market. The RSI has resumed its positive slope, and the MACD is regaining ground below its red signal line, though the indicators have been moving against the market direction since the end of January, warning over a potential bearish divergence phenomenon—a bearish signal of a price reversal.

The 106.00 number could be the next target if the bulls close above 105.65.

Otherwise, should selling pressure resurface, the 20-period simple moving average (SMA) at 105.00 and the key restrictive zone around 104.85 may deter any decline towards the 104.60 barrier. If the bears breach the latter, the door would open for the 104.40 mark.

In brief, USDJPY is expected to trade bullish in the near term, with immediate resistance likely coming within the 105.45 - 105.65 zone.