USD/JPY rebounds from 104.92/81

USD/JPY has just confirmed 104.92/81 as the new support and is therefore poised for further gains. This is particularly true considering that the currency pair is bullish on all three relevant time-frames (on daily, weekly and monthly charts). The initial target for the rally should be 105.96/85, while a more serious test of the upward momentum is likely to take place near 106.57/40.

The sentiment with respect to USD/JPY is not as bearish as it was on Tuesday, when 69% of positions were short; but there still remains a distinct difference between the amounts of bulls (38%) and bears (62%). Despite the recent sharp fluctuations in the ratio between the longs and shorts, most of the orders are the buy ones—73%.