Talking Points
- USD/JPY Rally at risk heading into U.S. Durable Goods / FOMC Minutes
- Updated targets & invalidation levels
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Technical Outlook: USDJPY has been trading within the confines of an ascending pitchfork formation extending off the August & September lows with the weekly opening range taking shape just below near-term confluence resistance at the upper parallel. This region converges on the May high at 111.45 with more significant resistance seen at the 50% retracement of the decline off the 2015 high at 112.29 – both of these levels are areas of interest for near-term exhaustion / short-entries.
Interim support rests at 109.76 backed by near-term bullish invalidation at 108.57 (area of interest for long-entries). From a trading standpoint, heading into tomorrow’s U.S. Durable Goods Orders and subsequent release of the FOMC minutes, the immediate advance is at risk heading into structural resistance and we’ll be looking for a pullback to offer more favorable long entries off the median-line.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net short USD/CAD- the ration stands at -1.82 (35% of traders are long)- weak bullish reading
- Long positions are 1.8% below levels seen last week while short positions are 15.0% higher over the same period.
- Open interest is 15.5% above its monthly average.
- The recent uptick in market participation alongside a building short positions keeps the focus higher near-term. That said, the exchange rate is coming into significant resistance with the immediate advance at risk heading into the upper parallel.
Relevant Data Releases
Looking for trade ideas? Review DailyFX’s 2016 4Q Projections
Other Setups in Play:
- USD/CAD Pullback Eyes Key Support Zone Ahead of Canada Retail Sales
- Webinar: FX Majors in Focus as USD Rally Dissipates
- Gold Prices into Support as Trump Rally Ignites the Dollar
- USD/CAD Testing Monthly Open Support Ahead of Canada CPI
- AUD/USD Breakdown to Turn or Burn on Aussie Employment, US CPI
---Written by Michael Boutros, Currency Strategist with DailyFX
Join Michael for Live Weekly Trading Webinars on Mondays on DailyFX at 13:30 GMT (8:30ET)
Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com
