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. See our updated Privacy Policy here.

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
Oil - US Crude
Bullish
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
More View more
Real Time News
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/paOy1oQmn3
  • US indices have a packed week ahead with earnings from the major technology names, US GDP data due and an FOMC rate decision. With so much on the docket the potential for volatility is heightened. Get your stock market forecast from @PeterHanksFX here: https://t.co/CH4WoStHvu
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/otJwnuR7qe
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/s4lZWdJoXV
  • The US Dollar Index traded higher last week, sustaining its broader uptrend. Conflicting technical signals urge caution, but the directional bias remains skewed to the upside. Get your weekly USD technical forecast from @FxWestwater here: https://t.co/jcwhcsUBEN https://t.co/tKrlrRZlZn
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/MGy9OTXpUI
  • The Australian Dollar still remains vulnerable as it extends losses against its major counterparts. What is the road ahead for AUD/USD, AUD/JPY, AUD/NZD and AUD/CAD? Get your AUD technical forecast from @ddubrovskyFX here: https://t.co/ph20zFv4qS https://t.co/v4g9ATf4rr
  • 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/De69mTseZN
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/D7AeTM5OpH
  • EUR/USD tumbled last week on the day of the ECB’s latest policy announcement, and that weakness is set to continue this week as a flood of major Eurozone economic statistics is released. Get your weekly Euro forecast from @MartinSEssex here: https://t.co/9B4rJnzWuz https://t.co/ENF3xlkuyP
How Volume and Sentiment Points Towards USDJPY Decline

How Volume and Sentiment Points Towards USDJPY Decline

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