USD/JPY is under pressure. The pair broke above its 20-period and 50-period moving averages and is posting some rebound. The relative strength index is around its neutrality area at 50. Nevertheless, 100.70 is acting as a key resistance level, which should limit the upside potential. Even though a continuation of a technical rebound cannot be ruled out, its extent should be limited. On Thursday, U.S. stocks posted modest gains for the second consecutive day. Dow Jones Industrial Average increased 23 points (0.1%) to 18597, S&P 500 added 4 points (0.2%) to 2187, and Nasdaq Composite was up 11 points (0.2%) to 5240. U.S. government bonds prices rose as the benchmark 10-year U.S. Treasury yield eased further to 1.536% from 1.558% Wednesday. Gold stepped 0.3% higher to $1,351 an ounce extending its winning streak to a fourth session, and silver gained 0.4% to $19.73 an ounce. As long as 100.70 is resistance, the pair is likely to return to 99.50. A break below this level would open the way to further weakness toward the next support at 98.95.
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
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