USDJPY Maintains Desending Channel as Retail Traders Look for a Corrective Retracement

Potential 24 Hour Setups

*Trade updates during the course of the day will be provided through our real time news page.

Review of Price Action on the Previous Day’s Trade

USDJPY price action remains bounded by the descending channel which has remained intact since June. Recently there were rumors of a possible FX intervention by the BoJ. However, the Prime Minister said that he did not want the central bank to embark on any policy changes as of yet despite the strength of the yen weighing in on the export market. In turn, the pair pared Friday’s advance, and now looks to eye 85.00. Going forward, I will look for a retest of 85.50, with a target of 85.00 (stop at 85.85) as retail traders continue to look for a corrective retracement in the pair. Indeed, this trade set up if for the next 24 hours; however, my medium term outlook is a stronger U.S. dollar versus the Japanese yen.

Retail positioning relates to our speculative sentiment index which illustrates where traders are at in the market. The larger the retail positioning (highlighted area) is under the chart, the more likely it is that longs exceed shorts or vice versa. We will look to use this indicator in conjunction with other technical developments to dictate price action over the next 24 hours.

Every day at 16:00 GMT, we analyze potential 24 hour trade set ups. The trade is no longer valid if it is not triggered by 16:00 GMT the next day. Good luck trading!

Written by Michael Wright, Currency Analyst

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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, Intraday Trading, and Forex Trading Weekly Forecast