22.10.201418:32 Forex Analysis & Reviews: Technical analysis of USD/JPY for October 22, 2014

Fundamental overview:

USD/JPY is expected to trade in a higher range. It is underpinned by the reduced safe-haven appeal of the yen as the global risk sentiment improves (VIX fear gauge eased 13.41% to 16.08, S&P 500 closed up 1.96% at 1,941.28 Tuesday) on reports that the European Central Bank is considering fresh ways to stimulate the economy, while stronger-than-expected China 3Q GDP growth of 7.3% (versus forecast +7.2%) allayed fears that the world's second-largest economy would post a sharp slowdown. USD/JPY is also supported by the improved USD sentiment (ICE spot dollar index last 85.38 versus 85.01 early Tuesday) after higher U.S. Treasury yields (10-year at 2.227% versus 2.183% late Monday) and bigger-than-expected 2.4% increase in U.S. September existing home sales (versus forecast +1.0%) and demand from Japan's importers and ultraloose Bank of Japan's monetary policy. But USD/JPY gains are tempered by Japan's export sales.

Technical comment:
Daily chart is mixed as MACD is bearish but stochastics is rising from the oversold zone.

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 107.55 and the second target at 108.15. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 106.05. A break of this target would push the pair further downwards and one may expect the second target at 105.70. The pivot point is at 106.55.

Resistance levels:
107.55
107.85
108.15

Support levels:
106.05
105.70
105.50