FX.co ★ Technical analysis of USD/JPY for August 8, 2014

Overview:

USD/JPY is expected to consolidate in a lower range. USD/JPY is undermined by the selling of yen crosses amid the increasing risk aversion (VIX fear gauge rose 1.77% to 16.66, S&P 500 fell 0.56% to close at 1,909.57 overnight) as well as concerns over ongoing geopolitical tensions in the Middle East, and between the West and Russia over Ukraine. USD/JPY is also weighed by the lower U.S. Treasury yields and Japanese export sales. But USD/JPY losses are tempered by the demand from Japanese importers and the positive dollar sentiment (ICE spot dollar index last 81.53 versus 81.43 early Thursday) after smaller-than-expected U.S. jobless claims of 289,000 in week ended Aug. 2 (versus forecast 300,000); reports that Japan's Government Pension Investment Fund plans to increase its allocation to domestic stocks to over 20%; adjustment of positions before the weekend.

Technical comment:
The daily chart is mixed as MACD is bullish, but stochastics is falling from the overbought zone, inside-day-range pattern was completed on Thursday.

Trading recommendations:
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 101.40. A break of this target will move the pair further downwards to 101.15. The pivot point stands at 102.15. In case the price moves in the opposite direction and bounces back from the support level, then it will 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 102.45 and the second target at 102.75.

Resistance levels:
102.45
102.75
103

Support levels:
101.40
101.15
100.75