USD/JPY is expected to trade with bullish bias. US stocks continued advancing last Friday as sentiment was boosted by China's rate cut and strong earnings reported by a number of big technology firms. The Dow Jones Industrial Average rose 0.9% to 17,646, the S&P 500 gained 1.1% to 2,075 turning positive for the year, and the Nasdaq Composite was up 2.3% at 5,031. Nymex crude oil ended down 1.7% at $44.60 a barrel, gold edged down 0.2% to $1,163 an ounce, while the benchmark 10-year Treasury yield settled at 2.081%, up from 2.025% in the previous session. Meanwhile, the US dollar strengthened broadly against most other major currencies with the Wall Street Journal Dollar Index climbing 0.6% to a 3-week high of 88.69. The pair remains on the upside after reaching as high as 121.48 last Friday. The 20-period intraday moving average (MA) is standing above the 50-period one, while the intraday relative strength index (RSI) is around the neutrality level at 50. While the pair is likely to enter a consolidation after last Friday's rebound, the consolidation's extent is expected to be limited. As long as 120.40 holds as the key support, the pair is likely to rise towards the first upside target at 121.70 (last seen on August 28) and 122.30 (last seen on August 21) in extension.

Trading recommendations:

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 121.70 and the second target at 122.30. In the alternative scenario, short positions are recommended with the first target at 120.10 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 119.55. The pivot point is at 120.40.

Resistance levels:121.70 122.30 122.85

Support levels: 120.10 119.55 119.20