FX.co ★ Technical analysis of USD/JPY for October 13, 2015

USD/JPY is expected to trade in a lower range as the pair is under pressure. US indices closed higher on Monday led by shares in the utilities, healthcare equipment and services, and retailing sectors. Trading was quiet due to the Columbus Day holiday with 5.1 billion shares, which are the lowest volume since June 12. The DJIA rose 47.37 to 17,131.86, the S&P gained 2.57 to 2,017.46, and the Nasdaq added 8.17 to 4,838.64. US crude oil futures lost 5.1% to settle at $47.10 a barrel, while gold rose 0.66% to $1,163.77 a troy ounce. The US bond market was closed. There was no major economic data released. The dollar edged lower against other currencies on Monday, as some investors discounted the possibility that the Federal Reserve will raise interest rates in coming months.The pair has reversed down and remained under pressure below its key resistance at 120.10. The descending 50-period MA maintains a bearish bias, and it is currently playing a resistance role. Meanwhile, the intraday RSI lacks upward momentum. The first target to the downside is therefore set at the horizontal support and overlaps at 119.45. A break below this level would open the way to further weakness towards 119.20 in extension.

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 119.45. A breakout of that target will move the pair further downwards to 119.20. The pivot point stands at 120.10. 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 120.35 and the second target at 120.65.

Resistance levels:120.35 120.65 120.90

Support levels: 119.45 119.20 118.75