Upside movements are expected to prevail in USD/JPY. The pair broke above the upper boundary of the Bollinger Bands, which should indicate a continuation of the bullish trend. The upward momentum is further reinforced by a rising 50-period moving average, which acts as a support. At the same time, the relative strength index is supported by a rising trend line since Sept 29, and calls for further upside.
On Monday, U.S. stocks pulled back after Friday's rally, with shares in real estate and utilities sectors posting the biggest losses. The Dow Jones Industrial Average declined 54 points (-0.3%) to 18,253, the S&P 500 fell 7 points (-0.3%) to 2,161, and the Nasdaq Composite was down 11 points (-0.2%) to 5,300. On the economic front, the U.S. Institute for Supply Management said its manufacturing index showed an expansion reading of 51.5 in September (vs. 50.4 expected), up from a contraction reading of 49.4 in August.
To sum up, as long as 101.50 holds on the downside, look for a new rise toward 102.80 and then to 103.15.
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 102.80 and the second one at 103.15. In the alternative scenario, short positions are recommended with the first target at 101.25 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 100.90. The pivot point lies at 101.50.
Resistance levels: 102.80, 103.15, 103.45
Support levels: 101.25, 100.90, 99.60
The material has been provided by InstaForex Company - www.instaforex.com