USD/JPY is expected to trade with a bearish bias. Overnight, the US stock indexes ended higher for the first time in four sessions due to rising health care and energy shares. The Dow Jones Industrial Average rose 0.5% to 17574, the S&P 500 gained 0.2% to 2052, and the Nasdaq Composite was up 0.4% to 5045. Nymex crude oil lost 1.1% falling to $36.76 a barrel, gold edged down 0.2% to $1071 an ounce, and the benchmark 10-year Treasury climbed to 2.239% from 2.208% at the previous session.

Meanwhile, the US dollar rebounded broadly against most other major currencies. The Wall Street Journal Dollar Index gained 0.3% to 89.69 after losing 0.9% over the previous two sessions. EUR/USD declined 0.8% to 1.0940, USD/CHF rose 0.5% to 0.9874, and USD/JPY edged up 0.1% to 121.58. The pair keeps rebounding and has breached the previous key resistance. Currently it is trading above the upper Bollinger Band with strong upward momentum. The 20-period (30-minute chart) moving average has crossed above the 50-period one, while the relative strength index is riding on a rising trend line pointing to the overbought level of 70. The intraday outlook has turned very bullish. The first downside target is seen at 120.50 (around the low of December 3) and the second one at 120.15 (around the low of December 4).

Trading recommendations:

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 120.50. A break of that target will move the pair further downwards to 120.15. The pivot point stands at 122. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 122.45 and the second target at 122.70.

Resistance levels: 122.45 122.70 123.10

Support levels: 120.50 120.15 119.75