USD/JPY is expected to trade with a bearish bias below 120.35. Overnight, the US stocks were mixed. The Dow Jones Industrial Average gained 13.76, or 0.1%, to 16790.19. The S&P 500 lost 7.13, or 0.4%, to 1979.92, while the Nasdaq Composite declined 32.90, or 0.7%, to 4748.36. Crude-oil futures jumped more than 4% on signs of falling supply. Gold was 0.8% up to $1,146.80 a troy ounce. The yield on the 10-year Treasury eased to 2.033%. The US Trade Balance widened in August posting the largest rise in five months as imports picked up and weaker overseas growth limited sales to customers abroad. The gap increased 15.6% to $48.33B from a revised $41.81B in July. The euro rose against the US dollar trading around $1.1275 ahead of a speech of European Central Bank President Mario Draghi. The pair stands below its resistance at 120.35 and remains on the downside. The intraday RSI is below 50 but lacks downward momentum. Further downside is therefore expected with the next horizontal support and overlap set at 119.75 at first. A break below this level would call for further decline towards 119.45 in extension.
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 119.75. A breakout of that target will move the pair further downwards to 119.45. The pivot point stands at 120.35. 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 120.65 and the second target at 120.95.
Resistance levels: 120.65 120.95 121.30
Support levels: 119.75 119.45 119.20