News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
More View more
Real Time News
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/fGi6YgqqQt
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/fdigOgkmio
  • A forex trader is strategic, disciplined and always switched on to the markets. Learn how to build an FX mindset here: https://t.co/tB3aAErd70 https://t.co/Ilqz8BWTk0
  • The final ‘full’ week of the year brings about the last wave of significant event risk from around the globe, including three central bank rate decisions (Fed, BOE, & BOJ). Get your market update from @CVecchioFX here:https://t.co/PhqxSPlngI https://t.co/XX57vSjQwV
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/HOvzuOICQx
  • Ever wonder if there are other chart types that can be sued for technical analysis? HLOC charts are discussed in the following article as well as their pros and cons. Learn more here: https://t.co/qV3c7a4YR3 https://t.co/32hYzqhuZ9
  • The Australian Dollar sits on the crossroads of Treasury yields, the S&P 500 and US fiscal stimulus expectations. Will $AUDUSD gains slow? Chinese Q4 GDP and Australian jobs data are due. Get your market update from @ddubrovskyFX here: https://t.co/BsYmmWFYOH https://t.co/HhLqb2iVgk
  • #Gold prices have come under significant pressure to kick-off 2021. However, the formation of bullish technical patterns across multiple timeframes suggests that a rebound higher may be at hand. Get your market update from @DanielGMoss here: https://t.co/Dpf8N4Fh0T https://t.co/pnZpnM9yT5
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/yCtLFemdNc
  • GBP underpinned as BoE downplays negative rates, alongside vaccine rollout. Get your market update from @JMcQueenFX here: https://t.co/n6V6uw0XV5 https://t.co/Toq2fxSdBE
How Volume and Sentiment Points Towards USDJPY Decline

How Volume and Sentiment Points Towards USDJPY Decline

2015-01-23 19:00:00
Rob Pasche, Forex Trading Instructor

Talking Points:

  • USD/JPY has been in a long term uptrend
  • Volume has begun waning during bullish moves, a bearish signal
  • Retail sentiment has flipped positive, a bearish signal

I am not normally one to trade against a strong trend, so when I first began seeing sell signals appear in the USDJPY, I was skeptical. It has been moving higher for so long, it is hard to convince myself that it may reverse. But by looking at recent volume levels for the last few price swings and reading the corresponding retail sentiment, the USDJPY could actually move lower.

Sign up for my email list to receive my latest articles and videos.

USD/JPY Volume Decreases During Bullish Moves - Bearish

In my previous article titled, Trading Strategies Based on Volume, Part 2: Confirming Trends, I discussed how important volume can be for confirming a price move. We basically want to see volume increase when price is moving in our preferred direction (and see volume decrease when price is moving in the opposite direction.)

The daily chart below shows the most recent price action we've witnessed on the USDJPY and its corresponding volume. The difference we see in volume when price is rising or falling is very distinct. Each time price rallies, we see a decrease in volume; and each time price falls, we see an increase in volume.

Learn Forex: USD/JPY Daily Chart – Volume Gives Bearish Outlook

How Volume and Sentiment Points Towards USDJPY Decline

(Created using Marketscope 2.0 charts)

USD/JPY SSI Has Flipped Positive - Bearish

I value the SSI above any other trading tool. If you are unfamiliar with how it works, check out this how-to article on using the SSI. As a contrarian indicator, when SSI is a positive number we look to sell; and when negative, look to buy. It sounds too simplistic to work, but I have seen SSI prevail time and time again. It is not guaranteed to be right every time, but I believe it works enough to give Forex traders an edge

.

The chart below shows historical SSI (red and green bars) and price (black line). Over the past two years, we've seen cycles between positive and negative SSI and price's reaction that followed. During the times where SSI was negative (red), price rallied significantly. During the times where SSI was positive (green), price stalled and moved sideways.

Learn Forex: USD/JPY Speculative Sentiment Index (SSI) - Flipping Positive

How Volume and Sentiment Points Towards USDJPY Decline

(Screen capture from DailyFXPlus.com)

We are currently in a stalling phase where price is not moving up or down, but if price is able to break below the nearest swing low of 115.50 and SSI continues to be in the green, it could mark the beginning of a major reversal.

We can access SSI figures every Thursday on DailyFX, or we can access SSI updated twice a day if we have access to DailyFX Plus. For more information on accessing DailyFX Plus, click here.

In Conclusion

The USDJPY has been extremely strong, but there are at least two valid reasons to look for shorting the pair if 115.50 is broken, volume and sentiment. Please perform your own due diligence before placing an actual position on your own account. Better yet, use a demo account to practice trading risk-free before trading with real money. This way you can learn and develop your own strategy before trading live.

Good trading!

---Written by Rob Pasche

To contact Rob, email rpasche@dailyfx.com.

Video Lessons || Free Forex Training

Trading Using Fibonacci (13:08)

Reading the RSI, Relative Strength Index (13:57)

Money Management Principles (31:44)

Trade Like a Professional Workshop (1:44:14)

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES