USD/JPY is expected to trade with bullish bias above 117.30. The pair holds above its horizontal support at 117.30 and lacks downward momentum. The positive outlook is reinforced as the relative strength index broke above a declining trend line on December 20. US government bonds rebounded as the yield on the 10-year Treasury dropped to 2.535% (vs 2.566% on Tuesday). On the economic data front, MBA mortgage applications rose 2.5% in the week ended December 16th comparing to a decline of 4% in the previous week. In other news, existing home sales increased to 5.61M units in November (estimated 5.50M) from 5.57M in the previous month (revised from 5.60M).
Thus, as long as support at 117.30 is not broken, look for a further upside toward 117.80 and even 118.00 in extension.
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 117.80 and the second one at 118.00. In the alternative scenario, short positions are recommended with the first target at 117.10 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 116.90. The pivot point lies at 117.30.
Resistance levels: 117.80, 118.00, 118.40
Support levels: 117.10, 116.90, 116.50
The material has been provided by InstaForex Company - www.instaforex.com