19.08.201410:57 Forex Analysis & Reviews: Technical analysis of USD/JPY for August 19, 2014

Overview:

USD/JPY is expected to trade in a higher range. It is underpinned by the yen-funded carry trades amid improved investor risk sentiment (VIX fear gauge eased 6.31% to 12.32; S&P 500 rose 0.85% to close at 1,971.74 overnight) as worries eased over the geopolitical tensions in Ukraine. USD/JPY is also supported by the demand from Japanese importers and higher U.S. Treasury yields (10-year at 2.394 versus 2.345 late Friday), stronger dollar sentiment (ICE spot dollar index last 81.59 versus 81.45 early Monday) after surprise rise in U.S. NAHB housing market index to 55 in August from 53 in July (versus the forecast for no change). But the USD/JPY gains are tempered by Japanese export sales.

Data focus:

0500 GMT Japan June revised indexes of business conditions;
0600 GMT Japan July revised machine tool orders;
1230 GMT U.S. July CPI, housing starts and building permits.

Technical comment:
The daily chart positive-biased as MACD & stochastics in a bullish mode, although the inside-day-range pattern completed on Monday.

Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 102.75 and the second target at 103. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.20. A break of this target would push the pair further downwards and one may expect the second target at 101.95. The pivot point is at 102.40.

Resistance levels:
102.75
103
103.25

Support levels:
102.20
101.95
101.65