USD/JPY: the rise will follow the correction

4 September, 2014

Current trend

On Wednesday the pair USD/JPY has been corrected to the support level of 104.75 (middle MA of Bollinger bands indicator), but couldn’t consolidate below it. Dollar has been supported by the Beige Book release in USA. According to this report the recovery of US economic system is stable. Meanwhile Bank of Japan announced that the regulator wouldn’t change national monetary policy.

Today the movement of the pair may be affected by US releases: Unemployment Claims and Trading Balance.

Support and resistance

Market players are being cautious prior to the Non-Farm Payroll release. However, the pair has a potential to rise up to the levels of 105.20-105.30.  However, if the price breaks down the level of 104.75, the downward correction will continue.

Technical indicators give controversial signals. Bollinger Bands are directed upwards, the price chart is near the lower MA, which acts as a support. MACD histogram is in positive zone, its volumes are decreasing. Stochastic lines have left the oversold zone and given a signal to buy.

Trading tips

It is recommended to open short-term long positions at current price with targets at 105.20. Pending sell orders can be placed at the same level. If the price breaks down the level of 105.75, short trades should be opened with take-profits at 104.25.

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