USD/JPY is expected to trade with bearish bias as the pair continues sliding downwards. US indices closed lower on Tuesday pressured by shares in the pharmaceutical biotechnology and life sciences, transportation and semiconductor and semiconductor equipment sectors. The DJIA fell 49.97 points, or 0.3%, to 17,081.89. The S&P 500 slipped 13.77 points, or 0.7%, to 2,003.69, and the Nasdaq Composite declined 42.03 points, or 0.9%, to 4,796.61. US crude prices slipped 0.9% to $46.66 a barrel. Gold prices added 0.1% to $1,165.80 a troy ounce. The yield on the 10-year Treasury note fell down to 2.056%. On the economic data front, the US September small business optimism rose to 96.1 from 95.9 in August. The greenback advanced against currencies of emerging markets and commodity exporting countries as Chinese exports fell 3.7% in September from a year earlier, while imports fell 20.4% from a year earlier. The pair is capped by its descending 50-period intraday MA and remains under pressure below its key resistance at 119.90. The intraday RSI is below 50 and lacks upward momentum. The first target to the downside is therefore set at the horizontal support and overlap at 119. A break below this level would open the way to further weakness towards 118.80 in extension.
Trading recommendations:
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 119. A breakout of that target will move the pair further downwards to 118.80. The pivot point stands at 119.90. 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 120.10 and the second target at 120.35.
Resistance levels:120.10 120.35 120.65
Support levels: 119 118.80 118.40
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