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    Technical analysis of USD/JPY for February 18, 2016 2016-02-18


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    USD/JPY is expected to trade with bearish bias.Overnight, U.S. stocks closed higher again thanks to buying of energy shares (driven by oil prices' rally), bank and consumer discretionary shares. The Dow Jones Industrial Average gained 1.6% to 16,453, the S&P 500 also rose 1.6% to 1,926, while the Nasdaq Composite was up 2.2% to 4,534.

    Nymex crude oil surged 5.6% to $30.66 a barrel, gold added 0.7% to $1,209 an ounce, while the benchmark 10-year Treasury yield jumped further to 1.819% from 1.779% in the previous session.

    Meanwhile, the U.S. dollar did not get much higher as minutes from the Federal Reserve's January meeting failed to provide clarity on when the central bank will raise interest rates again. EUR/USD edged down 0.1% to 1.1127, while USD/CHF gained 0.4% to 0.9919. At the same time, USD/CAD plunged 1.4% to 1.3667 as the Canadian dollar appreciated with oil prices. The pair is trading within a bearish channel while hovering around the 20- and 50-period moving averages. A break below the channel's lower boundary would trigger a further drop towards the first downside target at 113 and the second one at 112.25.

    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 113. A break of this target will move the pair further downwards to 112.25. The pivot point stands at 114.40. 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 114.90 and the second target at 115.25.

    Resistance levels: 114.90, 115.25, 115.85

    Support levels: 113, 112.25, 112

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