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USD/JPY - Anticipating Resistance

Last time we looked at USD/JPY, we noted that 113.00 was a key resistance and that a break above it opens up a bullish outlook to 118.60, near the high on the year.

The fact that there were key resistance factors around 113.00 suggested that the extension will be sharp. This has been the case so far, but we should soon anticipate resistance again.

USD/JPY Daily Chart

(click to enlarge)

Breakout Extension:

- The daily chart shows that after the break above 113.00, price has been bullish every session. 
Resistance and Overbought Signal:
- If price gets to 115-115.50, it will be in a resistance area. 
- This was resistance for a multi-month consolidation range earlier this year.
- Also, note that the RSI is already above 70, which is a sign of being overbought. The next clue to anticipate is a bearish divergence between the RSI and price. (RSI makes a lower high while price makes a higher high). 
Support for Pullback:
- If we do indeed get a pullback, I think price should hold above 112.00 and even 113.00 if the market is bullish. 
- Furthermore, the RSI should hold above 40, and even 50 if the uptrend is strong.
- On the other hand, a break below 112.00 while the RSI clears below 40 makes the bullish scenario less likely.

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