USD/JPY: bearish trend develops

28 October, 2015

Current trend

On Tuesday, the American currency continued declining, being pushed down again by negative macroeconomic releases. Moreover, weak statistics lower the chances that the Fed would hike interest rates before the year is out.

Thus, on Monday, New Home Sales Change reported an 11.5% fall in September from a 5.2%growth in the previous month, while just a 0.4% decline was expected. On Tuesday, Consumer Confidence indicated a decline from 102.6 to 97.6 points against a positive forecast of 102.9 points.

Support and resistance

Bollinger Bands indicator on the daily chart is directed horizontally. The price range is trying to fix within the current borders. MACD is turning down and forming a sell signal. Stochastic continues declining.

The indicators recommend short positions in the short term.

Support levels: 120.34, 120.00, 119.62 (22 October low), 119.39, 119.05, 118.67, 118.24, 118.00.

Resistance levels: 120.56 (6 October high), 121.00, 121.23, 121.48 (26 October high), 121.73 (28 August high), 122.00.

Trading tips

Long positions can be opened after the breakout of the level of 120.70 with targets at 121.40, 122.00 and stop-loss at 120.50. Validity - 1-3 days.

According to the indicators, a downward trend seems to be a likelier scenario. Thus, short positions can be opened after the breakdown of the level of 120.00 with targets at 119.60, 119.00, 118.40 and stop-loss at 120.30. Validity – 1-3 days.

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