Technical analysis of USD/JPY for October 01, 2015 Market Analysis Review

USD/JPY is expected to trade upside as bias remains bullish. On the last trading day of September and the third quarter, US stocks advanced as shares in energy, materials and healthcare sectors rebounded. The Dow Jones Industrial Average rose 1.5% to 16,284, the S&P 500 gained 1.9% to 1,920, and the Nasdaq Composite ended 2.3% higher at 4,620. Nymex crude oil edged down 0.3% to settle at $45.09 a barrel, while gold fell 1.0% to $1,115 an ounce. The 10-year Treasury yield was at 2.061%, up from 2.056% at the previous session. Regarding economic data, the ADP payrolls increased 200,000 in September (vs +190,000 expected, +190,000 in August), while the Chicago Business Index came in at 48.7 in September (vs 54.4 in August). The US dollar strengthened broadly against most major currencies. EUR/USD dropped 0.6% to 1.1176, GBP/USD edged down 0.1% to 1.5127, USD/JPY edged up 0.1% to 119.84. On the other hand, the Canadian dollar rebounded against the US dollar from an 11-year low as the country's GDP grew 0.3% on-month in July (vs +0.2% expected). The pair remains on the upside as 119.45 provides a key support base. It is above the 20-period intraday moving average (MA), while the intraday relative strength indicator (RSI) is around the neutrality level at 50. The first upside target is set at 120.25 (yesterday's high) and the second one is at 120.45.

Trading recommendations:

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 120.20 and the second target at 120.45. In the alternative scenario, short positions are recommended with the first target at 119.20 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 119.00. The pivot point is at 119.45.

Resistance levels: 120.20 120.45 120.65

Support levels: 119.20 119.00 118.70

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