USD/JPY is expected to trade with bullish bias. The pair posted a strong rebound this morning, and also broke above its previous key resistance at 103.80, which now acts as a support role. The relative strength index is displaying strong bullish momentum, calling for further advance.
On Friday, U.S. stocks remained under pressure ahead of Tuesday's presidential election where polls show a tightening race between Hillary Clinton and Donald Trump. The S&P 500 declined 3 points (-0.2%) further to 2,085 extending its losing streak to the ninth session, the longest since December 1980. The Dow Jones Industrial Average dropped 42 points (-0.2%) to 17,930, and the Nasdaq Composite was down 47 points (-0.9%) to 5,058.
Consumer staples shares performed the worst, while health-care and real estate stocks outperformed.
Concerning the October jobs report, the U.S. Labor Department reported that non-farm payrolls increased 161,000 (vs. +173,000 expected, +191,000 in September) as the jobless rate declined to 4.9% (as expected) from 5.0% in September.
However, on Sunday, FBI Director James Comey announced in a letter to Congress that the agency has found no evidence of criminality in newly discovered emails related to Hillary Clinton's private server.
Hence, as long as 103.80 is not broken, the pair is more likely to challenge its next resistance at 105.10, and if breakout, look for a continuation of the rebound to 105.50.
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 105.10 and the second one at 105.50. In the alternative scenario, short positions are recommended with the first target at 103.30 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 102.80. The pivot point lies at 103.80.
Resistance levels: 105.10, 105.50, 106
Support levels: 103.20, 102.80, 102.55
The material has been provided by InstaForex Company - www.instaforex.com