USD/JPY: Yen strengthened

18 January, 2016

Current trend

In the end of last week, the pair significantly fell amid growing anxiety on the market and the publication of poor macroeconomic statistics on Retail Sales and Industrial Production in the US.

In addition, the pair was pressured by Bank of Japan Governor Haruhiko Kuroda speech in which he stated that the regulator is presently not considering expanding its stimulation program. At the same time, he noted that inflation is still substantially below the 2% target and additional measures could be applied if needed.

Support and resistance

Bollinger Bands on the daily chart is moving down while the price range is narrowing from the top. MACD is trying to turn up but keeping a sell signal. Stochastic is turning down.

The indicators recommend waiting for clearer trading signals.

Support levels: 117.00, 116.68 (11 January low), 116.50 (15 January low), 116.19 (24 August low).

Resistance levels: 117.32 (local high), 118.00, 118.35 (13 January high), 118.67, 119.05, 119.38, 119.69 (5 January high), 120.16.

Trading tips

Long positions can be opened after the breakout of the level of 117.44 with the target at 120.00 and stop-loss at 116.84. Validity – 1-2 days.

Short positions can be opened after the breakdown of the level of 117.00 with the target at 116.00 and stop-loss at 117.40. Validity – 2-3 days.

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