17.02.201611:16 Forex Analysis & Reviews: Technical analysis of USD/JPY for February 17, 2016

USD/JPY is expected to trade in a lower range. Overnight, the US stocks continued their rally as investors took up shares in sectors that have been recently beaten down. Buying was spotted in financial and technology shares, while consumer discretionary, industrial, health-care and materials shares also posted solid gains. The Dow Jones Industrial Average rose 1.4% to 16196, the S&P 500 gained 1.7% to 1895, while the Nasdaq Composite was up 2.3% at 4435.

Nymex crude oil lost 1.4% to $29.04 a barrel, gold dropped 0.8% to $1,200 an ounce, while the benchmark 10-year Treasury yield rose further to 1.779% from 1.746% last Friday.

The U.S. dollar grew stronger against most other major currencies upon further improvement in market sentiment. EUR/USD edged down 0.1% to 1.1141, GBP/USD lost 0.9% to 1.4303, and NZD/USD was down 1.1% to 0.6573. USD/CAD performed volatile price action as it plunged to 1.3705 before closing up 0.2% at 1.3859. Meanwhile, USD/JPY slid 0.5% to 114.06. Currently, it is trading around the 20-period moving average, which stands well below the 50-period one. If the pair fails to up-hold the level of 114.40, it should decline toward the first downside target at 113.00.

Trading recommendations:

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 113. A break of this target will move the pair further downwards to 112.25. The pivot point stands at 114.40. In case 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 114.90 and the second target at 115.25.

Resistance levels: 114.45, 115.25, 115.85

Support levels: 112.35, 111.60, 111.25