Overview:
USD/JPY is consolidating with bullish bias after hitting four-week high of 78.97 on Tuesday. The rate is underpinned by reduced safe-haven appeal of yen and yen-funded carry trades amid positive risk sentiment (VIX fear gauge eased 0.33% to 15.22, S&P up 1.03% overnight) on stronger-than-expected U.S. corporate earnings; diminished worries over the euro-zone debt crisis on reports that Spain was considering applying for a precautionary credit line from the European Stability Mechanism which is likely to face less opposition from creditor nations versus a full bailout request, and Moody's this morning affirmed Spain's rating at Baa3; rise in U.S. home builders housing market index to six-year high of 41 in October from September's 40 (meeting forecast). USD/JPY is also supported by demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales; concerns about U.S. "fiscal cliff" that could throw the U.S. economy back into recession.
Preference:
As USD/JPY is rebounding and daily chart is positive biased. Buying is preferable. Recommended position is Long above 78.6 with targets at 78.95 and 79.23 in extension.
Resistance Levels:
78.97 (Tuesday's high)
79.23 (Sept. 19 high)
79.38 (200-day moving average)   
Alternative scenario:
In case if market moves in opposite direction, the recommended trade will be as follows sell below 78.6 and look for further downside with 78.45 and 78.25 as targets.
Support Levels:
78.45 *** intraday Support
78.28 (Monday's low-Friday's low)
77.94 (Thursday's low)  
Comment:
The pair is rebounding on its support as the RSI is turning up.The daily chart is positive-biased as MACD and stochastics are bullish.