USD/JPY is expected to face key resistance at 120.30. The US stocks ended lower as materials stocks were influenced by falling commodities prices. The Dow Jones Industrial Average fell 1.1% to 16330, the S&P 500 declined 1.2% to 1942, and the Nasdaq Composite lost 1.5% to 4756. Nymex crude prices dropped 1.8% to $45.83 a barrel, while gold fell 0.7% to $1,125 an ounce. The 10-year Treasury yield declined to 2.127%, the lowest closing level since August 24, from 2.212% in the previous session. The pair is approaching the key resistance at 120.45 from the downside. Intraday indicators are mixed, with the 20-period intraday moving average (MA) staying below the 50-period one, and the intraday relative strength indicator (RSI) breaking above the neutrality level of 50. If the pair fails to break above 120.30, it is expected to return to the first downside target at 119.35 (around yesterday’s low).
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 119.35. A breakout of that target will move the pair further downwards to 118.90. The pivot point stands at 120.45. 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 120.75 and the second target at 121.
Resistance levels: 120.75 121 121.50
Support levels: 119.35 118.90 118.20
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