USD/JPY is expected to consolidate and is choppy due to overnight sell-offs in US stocks triggered by signs of a deepened slowdown in China's economy. The Dow Jones Industrial Average edged down by 2.8% to 16,058, the S&P 500 fell by 3.0% to 1,913, and the Nasdaq Composite dropped by 2.9% to 4,636. Crude oil, which surged by 27.5% in the 3 prior sessions, plunged by 7.7% to $45.41 a barrel. Meanwhile, gold gained 0.6% to $1,138 an ounce and the 10-year Treasury yield tumbled to 2.174% from 2.204% on Monday. As in the stock market slump last week, the USD weakened against the euro (EUR/USD touch as high as 1.1319) and the yen (USD/JPY as low as 119.18). Regarding USD/JPY, the pair is posting a rebound from its overnight low of 119.18, but remains capped by the key resistance at 120.65. Meanwhile, the 20- and 50-period intraday moving averages (MAs) keep on declining and maintaining a bearish bias. As long as 120.30 is not broken above, the pair is expected to decline towards the first downside target at 119.20 (around yesterday's low).

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 119.20. A break of that target will move the pair further downwards to 118.85. The pivot point stands at 120.65. 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 121.05 and the second target at 121.40.

Resistance levels: 121.05 121.40 121.75

Support levels: 119.20 118.85 118.45