Technical analysis of USD/JPY for January 08, 2016.

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USD/JPY is expected to trade with bullish bias. Overnight, US stocks failed to halt their slide and posted the biggest decline since September. The situation in China, which saw another activation of a stock market circuit breaker yesterday, weighs on markets. Chinese authorities announced overnight that such a mechanism will be suspended. The Dow Jones Industrial Average dropped another 2.3% to 16,514, the S&P 500 fell 2.4% to 1,943, while the Nasdaq Composite lost 3.0% to 4,689. Nymex crude oil lost another 2.1% to settle at $33.27 a barrel, gold gained 1.4% to $1,109 an ounce, and the benchmark 10-year Treasury yield eased to 2.153% from 2.177% in the previous session. Meanwhile, the US dollar gave back some gains made in previous sessions with EUR/USD rising 1.5% to 1.0934, USD/JPY falling 0.7% to 117.66, USD/CHF sliding 1.4% to 0.9932. On the other hand, it continued strengthening against commodity-related currencies with USD/CAD gaining 0.3% to 1.4113 and AUD/USD plunging another 0.9% to 0.7009. Traders will be paying close attention to tonight’s US non-farm payrolls reports (+200K in December expected).The pair is seeing a continuation of its rebound initiated yesterday. It has kept challenging the upper Bollinger band and is currently trading above the 20-period moving average, which is well above the 50-period one. And the intraday relative strength index stays above the neutrality level of 50. The first upside target at 118.80 is in sight, and a break above this level would call for further rising towards 119.30. Trading recommendations: The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, it is recommended to open long positions with the first target at 118.80 and the second target at 119.30. In the alternative scenario, it is recommended to open short positions with the first target at 116.75, if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 116.10. The pivot point is at 117.35. Resistance levels: 118.80, 119.30, 119.75 Support levels: 116.75, 116.10, 115.75