OvervieW:
USD/JPY isconsolidating with bullish bias after hitting a four-month high of 101.36 Friday. It is underpinned by soft yen sentiment amid expectations that the Bank of Japan will take additional easing measures to counter a consumption-tax rise next April. USD/JPY is also supported by demand from Japan importers and investment trusts, the yen-funded carry trades amid positive risk sentiment (VIX fear gauge eased 3.16% to 12.26; S&P hit record high 1804.84 Friday before closing up 0.5% at 1804.76) as investors shrugged off prospect for earlier Fed's tapering of its bond-buying program amid optimism over U.S. economic recovery; rise in Kansas City Fed's manufacturing composite index to 7 in November from 6 in October, while the employment index jumped to 6 this month--the highest since early 2012--from a contractionary 2 in October. But USD/JPY gains are tempered by Japan exporter sales; profit-taking on yen-shorts.
Technical analysis:
Daily chart is positive-biased as MACD and stochastics are bullish, although the latter is in overbought zone, the 5- and 15-day moving averages are advancing.
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 far as the price is above its pivot point, a long position is recommended with the first target at 102 and the second target at 102.5. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 100.95 the breach of this target will move the pair further downwards and one may expect the second target at 100.65. The pivot point stands at 101.3.
Resistance levels:
102
102.5
102.85
Support levels:
100.95
100.65
100.35
