USD/JPY is expected to trade with bearish bias. Overnight, US stock indices extended losses, weighed down by declining metal and mining shares. The Dow Jones Industrial Average dropped another 0.9% to 17,568, the S&P 500 fell 0.7% to 2,063, and the Nasdaq Composite was down 0.1% to 5,098. Nymex crude oil slid a further 0.4% to $37.51 a barrel, gold gained 0.4% to $1,074 an ounce, and the benchmark 10-year Treasury edged down to 2.227% from 2.236% in the previous session.

Meanwhile, the greenback showed mixed trading yesterday. USD/CAD gained 0.7% to 1.3583, AUD/USD dropped 0.7% to 0.7214, GBP/USD fell 0.3% to 1.5006, while EUR/USD rebounded 0.5% to 1.0893 and USD/JPY was down 0.5% to 122.90. The pair is trading on the downside below both the 20-period (30-minute chart) and 50-period intraday moving averages. And the relative strength index badly directed below the neutrality level at 50. As long as such a bearish intraday outlook persists, the pair should return to the first downside target at 122.50 (around yesterday's low) before falling further to 122.25 (the low of December 4).

Trading recommendations:

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 122.50. A break of that target will move the pair further downwards to 122.25. The pivot point stands at 123.20. In case the price moves in the opposite direction and bounces back from the support level, it will move 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 123.50 and the second target at 123.75.

Resistance levels: 123.50 123.75 124

Support levels: 122.50 122.25 121.85