USD/JPY has bounced off a prominent resistance zone but it might not give up just yet

• USD/JPY has pushed 0.40% higher on Monday as risk sentiment improves.
• 107.87 has been an important zone in the past and it has been used once again.

USD/JPY 4-hour chart

USD/JPY has re-established its correlation with the stock market today as the price of the pair moved higher. On Monday's session, the price met some strong selling pressure at an old resistance zone of 107.87. As you can see from the chart below the level had been used many times to good effect.

Now the price has made a higher low higher high wave there is a high probability that the level might be tested again and potentially broken. Conversely, all of this could be a retracement from the dramatic fall from 109.85 to 107.00 in an 19 day period from 5th June.

Looking at the Relative Strength Index, the signal line has just about reached the overbought zone. If the indicator can manage to hold above the 50 area traders could push higher once again after retracing slightly. The 50% Fibonacci resistance level could be a sticky point as it is very close to the 108.00 psychological level.

Additional levels