USD/JPY: in contracting triangle

October 8, 2015

Current trend

On yesterday’s meeting, the Bank of Japan decided to leave its current QE program unchanged at 80 trillion Yen per year. However, a possibility of further monetary policy easing in the end of October remains.

After the news was released, the USD/JPY pair fell. Additional pressure on the pair comes as investors are switching into the Yen prior to important publications from the eurozone, the US and the UK.

Today the FOMC Minutes, BOE’s Governor Carney speech and FOMC Member Williams speech are due.

Support and resistance

The pair remains in the contracting triangle since end of August.

A breakdown of the level of 119.60 (ЕМА200 on the daily chart) would send the pair towards 118.65 (ЕМА50 on the weekly chart), 117.40 (year lows). Otherwise, the pair could grow to the levels of 120.50 (61.8% Fibonacci correction), 120.80 (ЕМА144 on the daily chart), 121.50 (50% Fibonacci) and 122.50 (38.2% Fibonacci), a breakout of which would cancel a downward correction in the pair and allow it to grow to year highs at 125.65.

OsMA and Stochastic on the 4-hour, daily and weekly charts give sell signals.

Support levels: 118.65, 118.90, 119.60.

Resistance levels: 120.50, 120.80, 121.00, 121.50, 122.00.

Trading tips

Pending buy orders can be placed at the level of 119.40 with targets at 120.15, 121.00 and stop-loss at 119.10.

Pending sell orders can be placed at the level of 121.00 with targets at 120.15, 119.40 and stop-loss at 121.20.

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