USD/JPY is expected to trade mainly in the downside movement. The pair broke below its 20-period and 50-period moving averages and is consolidating on the downside. The descending 20-period moving average crossed below the 50-period one and is playing a resistance role. Additionally, the pair broke below the lower boundary of the Bollinger Band, which could signal a continuation of bearish trend. The relative strength index has broken below its 30 level without showing any reversal signal. On Wednesday, U.S. stocks erased earlier losses to end modestly higher. The Dow Jones Industrial Average rose 21 points (0.1%) to 18573, the S&P 500 added 4 points (0.2%) to 2182, and the Nasdaq Composite edged up 1 point to 5228. Utilities shares performed the best, while retailer stocks came under pressure on profit-taking.
The minutes from the U.S. Federal Reserve’s July monetary policy meeting showed that policymakers were generally upbeat about the country’s economic outlook. However, there was little accord among them on the timing of raising interest rates, although some found it necessary to tighten policy soon.
As long as 100.70 is not broken above, the pair is likely to drop to 99.50 and even 98.95 in extension.
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 99.50. A break below this target will move the pair further downwards to 98.95. The pivot point stands at 100.70. If 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 101.20 and the second one at 101.75.
Resistance levels: 101.20, 101.75, 102.30
Support levels: 99.50, 98.95, 98.25
The material has been provided by InstaForex Company – www.instaforex.com
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