USD/JPY is expected to trade in a higher range. Overnight US stocks rallied as Chinese and global markets showed signs of stabilization. The Dow Jones Industrial Average rose 2.4% to 16492, its biggest one-day percentage and point gain in almost two weeks, the S&P 500 gained 2.5% to 1969, and the Nasdaq Composite was up 2.7% to 4811. Nymex crude oil edged down 0.2% to settle at $45.94 a barrel, gold was flat at $1120 an ounce, while the 10-year US Treasury yield rose to 2.191% from 2.128% last Friday. Meanwhile the US dollar fell against most other currencies amid a lack of certainty that the US Federal Reserve would hike interest rates in September.. The pair is trading on the upside with strong upward momentum. It has broken above the upper Bollinger band as those bands are widening. The 20- and 50-period intraday moving averages are ascending, and the intraday RSI has exceeded the over-bought level of 70 but shows no signs of a bearish divergence. Therefore, all technical indicators are pointing to a continued bullish bias. The first upside target is set at 121.45 (around the September 3 high) and the second at 121.75 (last seen on September 1).

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, long positions are recommended with the first target at 121.45 and the second target at 121.75. In the alternative scenario, short positions are recommended with the first target at 119.60 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 119.20. The pivot point is at 119.95.

Resistance levels: 121.45 121.75 122.35

Support levels: 119.60 119.20 118.90