USD/JPY is expected to advance further. The pair holds on the upside, and is likely to challenge the nearest resistance at 104.45. The rising 50-period moving average plays a support role and maintains a bullish bias. Furthermore, a support base at 102.80 (Sept 2 bottom) has formed, and is expected to limit any downside attempts. In addition, the relative strength index stands firmly above its neutrality area at 50, and lacks downward momentum. On the economic data front, a change in nonfarm payrolls reached 151k in August (forecasted 180k) compared with 275k in the previous month (revised from 255k). On the other hand, an unemployment rate in August remained unchanged at 4.9% (estimated 4.8%). In other news, factory orders improved to 1.9% in July (forecasted 2%) from a decrease of 1.8% a month earlier (revised from -1.5%). Finally, the trade balance improved with a deficit of $39.5B in July (estimated $41.5B) from a deficit of 44.7B in the previous month (revised from $44.5B).
To conclude, as long as 102.80 is not broken, look for further advance to 104.45 and even to 104.95 as possible.
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 104.45 and the second one at 104.95. In the alternative scenario, short positions are recommended with the first target at 102.40 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 102.10. The pivot point is at 102.80.
Resistance levels: 104.45, 104.95, 105.50
Support levels: 102.40, 102.10, 101.65
The material has been provided by InstaForex Company - www.instaforex.com