FX.co ★ Technical analysis of USD/JPY for April 23, 2014

Overview:

USD/JPY is expected to consolidate with bearish bias after hitting a two-week high at 102.73 on Tuesday. USD/JPY is underpinned by the yen-funded carry trades amid positive risk sentiment (VIX fear gauge eased 0.45% to 13.19, S&P 500 closed 0.41% higher overnight at 1,879.55) on smaller-than-expected 0.2% on-month drop in U.S. March existing home sales (versus minus 0.7% forecast), swing in Richmond Fed's manufacturing current business conditions index to expansionary +7 in April from -7 in March, 0.6% increase in U.S. Federal Housing Finance Agency monthly house price index in February. USD/JPY is also supported by the demand from Japan importers and investment trusts and soft yen sentiment following recent weak Japan March trade data. But USD/JPY gains are tempered by the Japan exporter sales.

Technical сomment:
Daily chart is positive-biased as MACD and stochastics are bullish, five-day moving average is rising above 15-day MA.

Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 102.05. A breach of this target will move the pair further downwards to 101.85. The pivot point stands at 102.50. In case the price moves in the opposite direction and bounces back from support level, and then it moves above its pivot point, it is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 102.70 and the second target at 102.95.

Resistance levels:
102.70
102.95
103.20

Support levels:
102.05
101.85
101.65