USD/JPY declined sharply on Monday, after sellers stepped in, following selloff in Chinese stock market that sent the traders switch to safe heaven currencies like Yen and Swiss franc.
- The ongoing bearish trend is set to continue for this pair as the resistance level at 120.19 is likely to act as strong barrier to the bulls and bring a further decline towards 118.70 and later 118.30 levels
. - On the data front, in a short while ISM Manufacturing PMI data is the major data set to be released from US market, forecasted at 49.7 from the previous reading of 48.6, if the data prints negative figures, the pair could further fall sharply.
- Strong support can be seen at 118.73, a break below this level will expose the pair all the way towards 118.00.
- Major resistance can be seen at 120.19, a break above this level will open the door towards 120.50 handle.
Recommendation: We prefer short around 119.40, targets 118.80, 118.30, SL 119.80.
Resistance Levels
R1: 119.40 (38.2 % Retracement Level)
R2: 119.68 (Oct 16th high)
R3: 120.19 (23.6% Retracement Level)
Support Levels
S1: 118.73 (50 % Retracement Level)
S2: 118.43 (Aug 26th lows)
S3:118.06 (61.8 % Retracement Level)
