USD/JPY is expected to trade with a bullish bias above 103.00. The pair remains bullish, backed by a rising trend line (since Oct 4), and is looking for a higher top. Besides, the relative strength index stands above its neutrality area at 50. In addition, a support base at 103.00 has formed, and the downside room should be limited by this level. On Wednesday, U.S. stocks rebounded. Banking shares were lifted by expectations of the U.S. Federal Reserve raising interest rates soon, and energy shares were boosted by oil prices' approach to $50 a barrel. The Dow Jones Industrial Average rose 112 points (+0.6%) to 18281, the S&P 500 added 9 points (+0.4%) to 2159, and the Nasdaq Composite was up 26 points (+0.5%) at 5316.
The Institute for Supply Management (ISM) reported that its non-manufacturing index increased to 57.1 in September (vs. 53.0 expected) from 51.4 in August. That was enough to flip the market back into "buy" mode after the selloff in the prior session.
Chicago Federal Reserve Bank President Charles Evans said he would be "fine" with raising interest rates by year end upon firm U.S. economic data.
Hence, further advance is expected with the next horizontal resistance and overlap set at 104.00 at first, and then to 104.30.
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 104.00 and the second one at 104.30. In the alternative scenario, short positions are recommended with the first target at 102.65 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 102.00. The pivot point lies at 103.00.
Resistance levels: 104.00, 104.30, 104.75
Support levels: 102.65, 102.00, 101.60
The material has been provided by InstaForex Company - www.instaforex.com