Talking Points
- USD/JPY rally eyeing near-term resistance confluence ahead of U.S. NFP
- Updated targets & invalidation levels
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Technical Outlook: A breach above the weekly opening range yesterday shifted the focus higher in USDJPY with the advance eyeing key near-term confluence resistance into 115.48. The pair has continued to respect these slope-lines which were derived from a pitchfork extending off the August & September lows. Heading into tomorrow’s U.S. Non-Farm Payrolls report, the immediate outlook remains constructive while above the weekly open which converges with former slope resistance at 112.75.
From a trading standpoint, the long-bias is at risk into this resistance confluence with a breach above August low at 116.08 needed to fuel the next leg higher targeting 118.10 and the 76.4% retracement at 119.43. Heading into the release I would be looking to fade strength into structural resistance with a pullback likely to offer more favorable long-entries. Near-term bullish invalidation rests with the weekly opening-range low / May high at 111.45- a break below this levels risks a more meaningful pullback with such a scenario targeting initial support targets at 107.76.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net short USD/CAD- the ratio stands at -1.69 (37% of traders are long)- bullish reading
- Long positions are 8.4% higher than yesterday and 3.2% below levels seen last week
- Short positions are 1.7% lower than yesterday but 1.5% above levels seen last week
- Market participation has continued to gather pace with open interest at 11.7% above its monthly average
- While the current SSI profile remains constructive, it’s worth noting that the subtle shift in positioning towards the long-side suggests that the long-bias may be at risk heading near-term as price approaches confluence resistance with NFPs on tap tomorrow.
Relevant Data Releases
Looking for trade ideas? Review DailyFX’s 2016 4Q Projections
Other Setups in Play:
- 3Q GDP, OPEC to Drive USD/CAD Volatility- Shorts at Risk into 1.3370
- NZD/USD Outlook Bearish Below 7150 ahead of US 3Q GDP
- Webinar: USD Rally Looks Tired Ahead of NFPs with Fed Hike Priced In
- Gold Prices in Freefall as U.S. Dollar Rally Stretches
---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)
FollowMichael on Twitter @MBForex or contact him at mboutros@dailyfx.com
