USD/JPY is expected to trade in a lower range as bias remains bearish. The pair stays above its horizontal resistance at 113.25, which should limit the downside potential. Even though a continuation of the consolidation cannot be ruled out at the current stage, its extent should be limited.
On Black Friday, the three major U.S. stock indexes chalked another trifecta of record closing highs in a shortened session. The Dow Jones Industrial Average advanced 68 points (+0.4%) to 19,152, the S&P 500 added 8 points (+0.4%) to 2,213, while the Nasdaq Composite was up 18 points (+0.3%) to 5,398.
At the same time, the Russell 2000 Index of small-cap shares also hit an all-time high extending its winning streak to a fifteenth day, the longest since 1996, and to an extent of 16%. Therefore, for the first time since 1999, the four major benchmark indexes closed at record highs on the same day.
In fact, the rally in the U.S. stock market has lasted for three weeks since Donald Trump won the presidency. On the other hand, the CBOE Volatility Index, VIX, slipped to 12.4, down 44% from its peak prior to the election.
As long as 113.25 is not broken above, the pair is expected to post some downside target to challenge its previous low at 11.30 at first, below 111.30 expect a second target at 110.75.
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 111.30. A break below this target will move the pair further downwards to 110.75. The pivot point stands at 113.25. 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 113.90 and the second one at 114.50.
Resistance levels: 113.90, 114.50, 114.75
Support levels: 111.30, 110.75, 110.20
The material has been provided by InstaForex Company - www.instaforex.com