USD/JPY Decision Time- 112.30 Line in the Sand

2017-02-22 18:31:00 Michael Boutros

Talking Points

USDJPY carves clear weekly opening range- shorts at risk into 112.30/40
Updated targets & invalidation levels
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Technical Outlook: USDJPY is in limbo and the focus is on a key structural confluence at ~112.30/40 where the lower parallel of the ascending pitchfork formation converges on some near-term Fibonacci considerations. I’ll favor the long-side while above this threshold with broader bullish invalidation steady at 111.07/45. Initials resistance is eyed into 114 with a breach through 115.51-116.08 needed to mark resumption of the broader uptrend.

USD/JPY 120min

Notes: A closer look at price action sees the pair carving a clear weekly opening range just above the monthly open / 61..8% retracement at 112.80/88.We can’t rule out another run the lower parallel just yet, the broader focus remains constructive while north of 112.33/39. Topside resistance targets eyed at 114.06, 114.70 & the 50% retracement at 115.10. A quarter of the daily average true range (ATR) yields profit targets of 25-28 pips per scalp.

A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-long USDJPY- the ratio stands at +1.73 (63% of traders are long)- bearish reading
Long positions are 6.0% higher than yesterday and 18.3% above levels seen last week
Short positions are 16.1% lower than yesterday and a full 26.7% below levels seen last week
Open interest is 3.3% lower than yesterday and 8.1% below its monthly average
While the current SSI profile continues to point lower, it’s worth noting that the recent draw down in short positioning has been accompanied by a decline in open interest; this suggests that the rally is running stops and leaves the risk higher while above key confluence support at 112.30.

Relevant Data Releases