USD/JPY Climbs Above 80; Targets 80.50 then 81.50

There is a break above the 80 handle and the USD/JPY continues to rally sharply since bouncing off 76.00. The daily chart shows a very bullish market the RSI pushes above 70 and 80. Although there it suggests near-term overbought condition, it also suggests strength in the break from recent bottoming process, and is a sign of bullish momentum in the medium term.

The next resistance levels could be first the 80.53 (50% retracement of the 85.50-75.55 dip). Above that, 81.50 is a pivot and July 2011 high and 81.70 is the 61.8% retracement level. The 81.50-81.70 area thus provides the next key resistance factors.

For now, throwback attempts should be expected to be supported above 78.25, and only a break below 78.00 should weaken the bullish case. If the market does reach 81.50-81.70 before a major throwback, the 79.50 area should also be expected to provide support. If the market does start to trend upwards, the RSI should also stay above 40, preferably 50 in the daily chart.