USD/JPY is expected to trade with bullish bias as upside prevails. Overnight, US stocks rallied over 1% as energy shares were boosted by higher oil prices. Nymex crude oil price settled up 2.5% to $41.74 a barrel after testing the psychological level of $40.00 a barrel. The Dow Jones Industrial Average rose 1.4% to 17,483, the S&P 500 added 1.5% to 2,053, and the Nasdaq Composite was up 1.2% to 4,984. Meanwhile, the benchmark 10-year Treasury yield declined further to 2.273% from 2.280% logged on Friday. And gold was broadly flat at $1,082.

The greenback strengthened against most other major currencies, particularly the euro, as investors sought protection in the US currency in the wake of Friday's attacks in Paris. The Wall Street Journal Dollar Index climbed 0.4% to 90.52, the highest closing level since December 2002. EUR/USD fell 0.9% to a seven-month low of 1.0684. USD/JPY gained 0.4% to 123.15, while NZD/USD dropped 1.0% to 0.6487. After touching as low as 122.19, the pair staged a powerful rebound yesterday and broke above a declining trend line. It is currently trading on the upside while being supported by an ascending 20-period intraday moving average (MA), which is above the 50-period one. And the intraday relative strength index (RSI) is well directed above the neutrality level of 50 lacking downward momentum. The intraday outlook has turned bullish, and the pair is expected to reach the first upside target at 123.60 (around the high of November 10) before targeting the second one at 124 (around the high of November 9).

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 123.60 and the second target at 124.00. In the alternative scenario, short positions are recommended with the first target at 122.60 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 122.30. The pivot point is at 122.90.

Resistance levels: 123.60 124 124.45

Support levels: 122.60 122.30 121.60