- USD/JPY targeting near-term resistance ahead of NFPs- Key range in focus
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Technical Outlook:USDJPY is trading just below slope resistance into the start of June trade and heading into U.S. Non-Farm Payrolls tomorrow, the focus is on the weekly opening-range which has taken shape just below. The broader risk is weighted to the downside while below this slope with a breach above 112.20 needed to invalidate the short-side bias. A break lower targets the 200-day moving average backed by 109.45/60.
Notes: A closer look at price action highlight near-term resistance at the indicated region just above 111.45 with key near-term support seen at the 61.8% retracement of the mid-April advance at 110.51- Look for a break of this range for guidance.
From a trading standpoint, I’ll favor fading strength while below resistance with a break of the weekly opening range lows to validate the next leg lower targeting 110.11 & the lower parallel at 109.47. A third of the daily average true range (ATR) yields profit targets of 23-26pips per scalp. Added caution is warranted heading into tomorrow’s U.S. labor report with the release likely to fuel increased volatility in the USD crosses.
- A summary of IG Client Sentimentshows traders are net-long USD/JPY- the ratio stands at +1.58 (61.3% of traders are long)- bearish reading
- Retail has remained net-long since May 17 when USDJPY traded was trading at 112.80- price has moved 1.9% lower since then
- Long positions are 2.8% higher than yesterday but 7.3% lower from last week
- Short positions are 1.5% higher than yesterday and 2.4% higher from last week
- While broader sentiment continues to point lower, the recent build in short-positions suggests the immediate rebound may have more to go before turning over. That said, from at trading standpoint, I’ll still favor fading strength while below structural resistance.
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Relevant Data Releases
Other Setups in Play:
- Cable Reversal Targets Monthly Open Ahead of NFPs, UK Elections
- Gold, Silver Prices Reach for Resistance
- Kiwi Flies Towards Resistance
- USD/MXN: Wall of Resistance Holds, Now What?
- Crude Oil Prices Target Resistance Ahead of OPEC
- Written by Michael Boutros, Currency Strategist with DailyFX