Overview:
USD/JPY continues to range trade. Japan September provisional trade statistics should be in the spotlight. USD/JPY is undermined by selling of yen crosses amid increased risk aversion (VIX fear gauge rose 13.51% to 17.06, S&P fell 1.66% on Friday) on weaker-than-expected 3Q earnings reports from U.S. blue-chip companies; 1.7% drop in U.S. September existing home sales; and disappointment after European Union heads of state concluded their two-day Brussels summit on Friday without clarity on when Spain will formally request a bailout or whether Greece will receive the next tranche of its bailout loan. USD/JPY is also weighed by lower U.S. Treasury yields; Japan exporter sales; and concerns about U.S. "fiscal cliff" that could throw the U.S. economy back into recession. But USD/JPY downside is limited by weaker JPY sentiment on expectations that the Bank of Japan will ease monetary policy later this month and demand from Japan importers.
Preference:
The pair is breaking bullish channel, long positions are preferable. Buy above 79.1 with first targets 79.7 and if the rate goes further upside, the next target is 79.9.
Resistance Levels:
R1 - 79.66 (Aug. 20 reaction high)
R2 - 79.97-80.00 (July 12 high-psychological level) 
R3 - 80.09 (July 5 high) 
Alternative scenario:
In case price goes below 79.1. Sell below 79.1. Look at further downside movement with 78.95 and 78.8 as targets.
Support Levels:
S1 - 78.91 (Thursday's low)
S2 - 78.8*** intraday support
S3 - 78.61 (Wednesday's low)   
Comment:
The pair is breaking above its resistance and remains within a bullish channel. USD/JPY daily chart is mixed as MACD is bullish; five-day moving average is above 15-day MA and rising; but stochastics has turned bearish as the pair is overbought; and inside-day-range pattern completed on Friday.