USD/JPY is expected to trade with a bearish bias. Last Friday, US stocks retreated slightly, dragged by shares in technology, energy and semiconductor sectors. The Dow Jones Industrial Average edged down 0.2% to 17897, the S&P 500 slid 0.1% to 2080, and the Nasdaq Composite was down 0.2% to 4938.
Nymex crude oil gave up another 2.8% to $40.36 a barrel last Friday. Furthermore, this morning, following oil producers’ failure to reach an output freeze deal at a meeting in Doha on Sunday, crude oil plunged as much as 6.8% down to $37.61 a barrel.
Boosted by oil prices’ slide, the US dollar strengthened against the Canadian dollar, with the USD/CAD surging up to 1.3% to 1.2985 this morning from last Friday’s 1.2819. And AUD/USD was once down 1.4% to 0.7588 this morning.The pair opened trade with a bearish gap this morning which has not yet been filled. Currently it has broken below the lower Bollinger band, calling for an acceleration to the downside. And the intraday relative strength index has dropped below the oversold level of 30 lacking upward momentum. The intraday outlook has turned very bearish and the pair should re-visit the first downside target at 107.75 before declining further to 107.30.
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 107.70. A break of this target will move the pair further downwards to 107.30. The pivot point stands at 108.85. 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 109.45 and the second target at 109.75.
Resistance levels: 109.45, 119.75, 110.10
Support levels: 107.70, 107.30, 107
The material has been provided by InstaForex Company – www.instaforex.com
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