USD/JPY is expected to trade in a lower range. The US dollar tumbled for the second day as worries concerning growth influenced global stock markets and fueled doubt whether the US Federal Reserve would lift interest rates next month. The Dow plunged 2.1% to 16,990.69, its lowest level since October 2014, the S&P 500 slid 2.1% to 2035.73, wiping out its gains for the year, and the Nasdaq Composite lost 2.8% to 4877.49. Meanwhile, gold gained 2.2% to $1153 an ounce, while crude oil rebounded 0.8% to $41.14 a barrel. Regarding USD/JPY, the pair broke below previous downside targets at 123.65 (the low of August 19) and 123.47 (the low of July 31) overnight and remains on the downside. The dropping 20- and 50-period intraday moving averages are maintaining the bearish bias. Besides, the intraday RSI stays within the selling area between 50 and 30 lacking upward momentum. As long as 123.65 holds as the key resistance, the pair could sink further to downside targets at 122.35 and 122 (both last seen on July 28).
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 122.35. A break of that target will move the pair further downwards to 122. The pivot point stands at 123.65. 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 124 and the second target at 124.25.
Resistance levels: 124 124.25 124.75
Support levels: 122.35 122 121.65