USD/JPY is under pressure. The pair broke below a bullish channel in place since September 13, and is now trading on the downside. Meanwhile, the process of lower highs and lower lows remains intact, which should confirm a negative outlook. Besides, the 50-period moving average is turning down, and plays a resistance role. The relative strength index lacks upward momentum. On Wednesday, U.S. stock indexes pared earlier gains to settle modestly lower as slumping oil prices continued to weigh down energy shares. The Dow Jones Industrial Average declined 31 points (-0.2%) to 18,034, the S&P 500 slipped 1 point to 2,125, while Nasdaq Composite gained 18 points (+0.4%) to 5173. U.S. government bonds rebounded pressing the benchmark 10-year Treasury yield to 1.689% from 1.732% Tuesday. Precious metals halted their downtrend as the U.S. dollar softened. Gold rebounded 0.3% to $1,322 an ounce ending a losing streak of five sessions. Silver gained 0.5% to $18.95 an ounce.
To conclude, as long as 102.85 holds on the upside, the pair is likely to drop to 102.00 at first, and then to 101.70.
Trading Recommendation: The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 102.00. A break below this target will move the pair further downwards to 101.70. The pivot point stands at 102.85. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 103.35 and the second one, at 103.75.
Resistance levels: 103.35, 103.75, 104.25
Support levels: 102.00, 101.45, 100.80
The material has been provided by InstaForex Company - www.instaforex.com