USD/JPY: NFP Gameplan Same as Jackson Hole- Buy the Washout
- USD/JPY at near-term resistance ahead of key U.S. data
- Updated targets & invalidation levels
Chart Created Using TradingView
Technical Outlook: Last week I highlighted a near-term consolidation structure heading into Jackson Hole with while noting that the, “trade has become increasingly one sided and from a trading standpoint, I would be looking for a washout to the downside before inevitably reversing higher.” Well Yellen did not disappoint with a brief break below the formation reversing sharply through trendline resistance.
We’ve been tracking this setup on SB Trade Desk all week – the advance responded to confluence resistance in early New York trade today with the pullback now sitting on the 61.8% median-line parallel. Heading into tomorrow’s U.S. Non-Farm Payrolls release, the trade remains constructive while above the weekly open at 102.05 with a break below the weekly opening-range low / 101.76 needed to shift the focus back to the short-side.
A breach above this key resistance region targets subsequent topside objectives at 104.47, 104.92 & 105.80. From a trading standpoint, I would be looking for a washout lower on the release to possibly offer favorable entries near structural support. If the pair just breaks higher from here, a fade opportunity may present itself on an exhaustion run into 105. For the complete setup and to continue tracking this trade & more throughout the week- Subscribe to SB Trade Desk.
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- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long USDJPY- the ratio stands at 1.82 (65% of traders are long)- weak bearish reading
- Long positions are 5.0% lower than yesterday and 32.5% below levels seen last week while Short positions jumped 58.0% during the same time period. .
- Open interest is 5.9% lower than yesterday and 1.3% above its monthly average
- Despite the fact that SSI remains net long, the shift in positioning this week suggests traders may be trying to fade this advance and leaves the pair vulnerable for a breakout heading into the start of September trade.
- Note that the last time we USDJPY SSI turned negative was the day before the July peak.
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Relevant Data Releases This Week
Other Setups in Play:
- AUDUSD Searches for Support as NFPs Take Center Stage
- USDCAD Rally to Face Canada GDP- Support at 1.2965
- GBPJPY at Key Resistance Hurdle Ahead of UK Mortgages- 133.14 Support
- Webinar: Post-Yellen USD Advance at Risk into Monthly Close / NFP
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---Written by Michael Boutros, Currency Strategist with DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.