Technical analysis of USD/JPY for December 08, 2016
December 8, 2016 11:03 amVideo
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USD/JPY is under pressure. The pair is consolidating on the downside after its downward breakout of a rising wedge pattern. The downside momentum is reinforced by its declining 20-period and 50-period moving averages, which play resistance roles and maintain the downside bias. The relative strength index is below its neutrality level at 50 and lacks upward momentum.
On Wednesday, US indices pushed sharply higher with the Dow and S&P 500 reaching all-time highs led by shares in the Automobiles & Components, Transportation and Telecommunication Services sectors. The Dow Jones Industrial Average rose 298 points (+1.6%) to 19,550, the S&P 500 added 29 points (+1.3%) to 2,241, and the Nasdaq Composite was up 61 points (+1.1%) to 5,394.
On the economic data front, MBA mortgage applications decreased 0.7% in the week ended on December 2 from a fall of 9.4% in the previous week. In Europe, Germany’s industrial production rose 0.3% in October from -1.6% in the previous month (revised from -1.8%). Economists anticipated +0.8%. The UK industrial production decreased 1.3% in October from -0.4% in September vs +0.2% anticipated by the consensus.
As long as 113.85 holds on the upside, look for a further drop toward 112.55 and even 112.10 in extension.
Trading Recommendation: 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 112.55. A break below this target will move the pair further downwards to 112.10. The pivot point stands at 113.85. In case the price moves in the opposite direction and bounces back from the support level, it will go 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 114.10 and the second one at 114.40.
Resistance levels: 114.10, 114.40, 114.80
Support levels: 112.55, 112.10, 111.60
The material has been provided by InstaForex Company – www.instaforex.com
Source: Instaforex.com
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