USD/JPY is expected to trade with bearish bias. Overnight, the US dollar and stocks kept nosediving amid global stock sell-offs. The Dow Jones Industrial Average tumbled another 3.6% to close at 15,871, its lowest closing level in 18 months, with a heavy trading volume of 13.9 billion shares, the largest daily volume since August 2011. The S&P 500 plunged 3.9% to 1,893, while the Nasdaq Composite dropped 3.8% to 4,526. Crude oil closed down 5.5% at $38.24 a barrel, the lowest closing level in 6.5 years. Again, safe-haven buying of the US government bonds pushed down the 10-year Treasury yield to 1.997%, the lowest one since April. Meanwhile the US dollar heavily dropped against the euro (EUR/USD highest at 1.1714), the Japanese yen (USD/JPY lowest at 116.14), and the Swiss franc (USD/CHF lowest at 0.9254). Regarding USD/JPY, the pair is posting a rebound from the overnight low of 116.14. The declining 20- and 50-period intraday moving averages are maintaining the bearish bias. As long as the key resistance at 120.25 is not surpassed, choppy price actions with bearish bias are expected. The first downside target is set at the horizontal level of 118.25, and the second one at 117.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 118.25. A break of that target will move the pair further downwards to 117. The pivot point stands at 120.55. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 121.30 and the second target at 122.35.
Resistance levels: 121.30 122.35 123
Support levels: 118.25 117 116.20
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