USD/JPY is expected to trade with a bullish bias. The pair is holding on the upside above its significant key support at 102.80 which should limit the downside attempts. The 50-period moving average is well directed, and maintains a bullish outlook. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited. On the economic data front, MBA mortgage applications improved by 2.8% in week ended August 26th from a fall of 2.1% in the previous week. On the other hand, ADP employment change fell to 177k in August (estimated 175k) compared to 194k in July (revised from 179k). Separately, the Chicago purchasing manager index decreased in August to 51.5 (forecasted 54) from 55.8 in the previous month. In other news, pending home sales increased by 1.3% MoM in July (estimated 0.7%) from a decline of 0.8% in June (revised from +0.2%).
Until102.80 is not broken, the intraday outlook stays positive with a first up target at 103.65. A break above this level would open the way to further upside toward the next resistance at 103.95.
Trading Recommendation:
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. Therefore, long positions are recommended with the first target at 103.65 and the second one at 103.95. In the alternative scenario, short positions are recommended with the first target at 102.40 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 102.10. The pivot point is at 102.80.
Resistance levels: 103.65, 103.95, 104.50
Support levels: 102.40, 102.10, 101.65
The material has been provided by InstaForex Company - www.instaforex.com