USD/JPY is expected to trade in higher range as the bias remains bullish. The pair stands firmly above its horizontal support at 101.85 as a support base has formed at this level, which should limit the downside attempts. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
On Monday, U.S. stock indexes ended slightly lower as gains in energy stocks were offset by losses in health-care shares. The Dow Jones Industrial Average lost 14 points (0.1%) to settle at 18529, the S&P 500 dipped 2 points (0.1%) to 2180, and the Nasdaq Composite was down 7 points (0.2%) to 5213. Bristol-Myers Squibb, which slumped 16% in the prior session as its lung cancer drug Opdivo failed to meet a study endpoint, shed another 4.7%.The U.S. dollar maintained its strength against other major currencies. EUR/USD edged up 5 pips to 1.1090, GBP/USD slid 0.2% to 1.3038, and USD/JPY rallied 0.6% to 102.43. The ICE U.S. Dollar Index then advanced 0.1% to 96.32 posting a winning streak of four straight sessions.
As long as 101.85 holds on the downside, further upside is expected with the horizontal resistance at 102.85. A break above this level would open the way to further advance toward the next resistance at 103.90.
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 102.85 and the second one, at 103.90. In the alternative scenario, short positions are recommended with the first target at 101.30, 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 100.95. The pivot point is at 101.85.
Resistance levels: 102.85, 103.90, 104.60
Support levels: 101.30, 100.95, 100.65
The material has been provided by InstaForex Company - www.instaforex.com