FX.co ★ USD/JPY: Downside

Overview:
USD/JPY is trading in lower range. The rate is undermined by continued profit-taking on yen-shorts after Bank of Japan said it would adopt a 2% inflation target at the earliest possible time, while announcing an open-ended asset purchase program which only starts in 2014 when its existing program expires, disappointing market participants with the timing of the new measures. USD/JPY is also weighed by Japan exporter sales; bigger-than-expected 1% drop in U.S. existing-home sales to 4.94 million December (vs. 5.1 million forecast). But USD/JPY losses tempered by demand from Japan importers; yen-funded carry trades amid improved risk tolerance (S&P rose 0.44% overnight) as latest easing steps from BOJ add to stimulus from other major central banks to bolster investor confidence across the world.USD/JPY daily chart is mixed as five- and 15-day moving are averages advancing; but MACD and stochastic are turned bearish.
Preference:
Sell below 88.85 with targets at 87.8 and 87.3 in extension.
Support levels:
S1 - 87.79 (Jan. 16 low)
S2 - 87.3
S3 - 86.82-86.77 (Jan. 9 low-Jan. 3 low)
Alternative scenario:
Buy above 88.85. Above 88.85 look for further upside with 89.35 and 89.85 as targets.
Resistance levels:
R1 - 89.35
R2 - 89.85
R3 - 90.18-90.25 band (Tuesday's high-Monday's two-and-a-half year).
Technical comment:
The upward potential is likely to be limited by the resistance at 88.85.