FX.co ★ Technical analysis of USD/JPY for May 21, 2014

Overview:

USD/JPY is expected to consolidate with bearish bias n. Spotlight is also on 1800 GMT FOMC meeting minutes for any new details on the U.S. economy or changes in the Federal Reserve's timeline for raising interest rates. USD/JPY is undermined by selling of yen crosses amid increased risk aversion (VIX fear gauge rose 4.35% to 12.96) as Wall Street tumbled overnight (S&P 500 off 0.65%) amid concerns over U.S. stock valuations. USD/JPY is also weighed by the lower U.S. Treasury yields and Japan exporter sales. But USD/JPY losses are tempered by the demand from Japan importers.

Technical сomment:
Daily chart is negative-biased as MACD is bearish, stochastics stays suppressed at oversold zone, five- and 15-day moving averages are declining.

Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 101.75. A breach of this target will move the pair further downwards to 100.30. The pivot point stands at 101.25. In case the price moves in the opposite direction and bounces back from support level, and then it moves above its pivot point, it is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 101.60 and the second target at 101.90.

Resistance levels:
101.60
101.90
102.35

Support levels:
100.75
100.30
100