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    Technical analysis of USD/JPY for February 23, 2016 2016-02-23


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    USD/JPY is expected to trade in a lower range. Overnight, U.S. stocks pushed higher, supported by shares in energy, automobile and transportation sectors. The Dow Jones Industrial Average rose 1.4% to 16,620, the S&P 500 gained 1.5% to 1,945, and the Nasdaq Composite was up 1.5% to 4,570.

    Nymex crude oil surged 6.2% to $31.48 a barrel, gold lost another 1.7% to $1,208 an ounce, while the benchmark 10-year Treasury yield climbed to 1.766% from 1.750% in the previous session.

    On the forex front, the "Brexit" uncertainty drove GBP/USD down 1.8% to 1.4148 yesterday (day low at 1.4056). EUR/USD also dropped 1.0% to 1.1026, and USD/CHF was up 1.0% to 0.9994. On the other hand, AUD/USD gained 1.0% to 0.7222, and NZD/USD was also up 1.0% to 0.6698. The pair ran up to 113.38 yesterday before reversing its course. It has produced a series of lower highs and is heading downward, breaking below the lower Bollinger band with strong momentum. The 20-period (30-minute chart) moving average has just crossed the 50-period one, and the intraday relative strength index is badly directed below the neutrality level at 50. The intraday outlook has turned very bearish with the first downside target at 112.35 (around yesterday's low) being in sight. Below this level, the next support would be found at 111.65 (a level of overlapping support and resistance seen on February 12).

    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 111.65. A break of this target will move the pair further downwards to 111.00. The pivot point stands at 112.70. 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 113.20 and the second target at 113.65.

    Resistance levels: 113.20, 113.65, 114.15 Support levels: 111.65, 111.0, 110.65

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