FX.co ★ Technical analysis of USD/JPY for Sep 18, 2014

Fundamental Overview:

USD/JPY is expected to consolidate with bullish bias after hitting six-year high at 108.69 this morning. Spotlight is on Thursday on U.K.'s referendum on Scottish independence. USD/JPY is underpinned by the positive dollar sentiment (ICE spot dollar index last 84.78 versus 84.09 early on Wednesday) after the Federal Reserve reduced its monthly bond purchases by another $10 billion to $15 billion and retained its guidance that short-term interest rates will remain near zero for a "considerable time" after the bond-buying program is expected to end next month, but forecast a faster pace of rate increases in 2015 and 2016--the median forecast from Fed officials sees the fed-funds rate at 1.375% by the end of 2015, compared with a 1.125% forecast in June. USD/JPY is also supported by the rise in U.S. NAHB housing market index to 59 in September--its highest since 2005--from 55 in August, demand from Japan importers and higher U.S. Treasury yields (10-year at 2.622% versus 2.589% late Tuesday) and yen-funded carry trades amid positive investor risk appetite (VIX fear gauge eased 0.63% to 12.65, S&P 500 closed up 0.13% at 2,001.57) as investors embrace the steady-as-she-goes message the Fed is delivering on the economy and interest rates. But USD/JPY gains are tempered by the Japan exporter sales and caution ahead of Scottish independence vote. 

Technical comment:
Daily chart is positive-biased as MACD is bullish, stochastics stays elevated at overbought zone, 5 and 15-day moving averages are advancing.  

Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 109.20  and the second target at 109.70. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 107.65. A break of this target would push the pair further downwards and one may expect the second target at 107.10. The pivot point is at 108.15. 

Resistance levels:   
109.20
109.70
110

Support levels:
107.65
107.10
106.85