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USD/JPY Daily Chart

USD/JPY Stair-Stepping Down Support

USD/JPY Price Chart - Daily Timeframe

Technical Outlook: USDJPY turned from median-line resistance last week after failing to punch through basic trendline resistance extending off the yearly high. The focus is on near-term confluence support at 111.86/99- a region defined by the 23.6% retracement and the 200-day moving average.

A break below this threshold (favored) targets more significant support at 111.10 where the 38.2% retracement converges on the 100-day moving average and the 50-line of the ascending pitchfork. A breach above the median-line would invalidate the short-bias with such a scenario targeting a critical resistance range at 114.37/61.

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USD/JPY 240min Chart

USD/JPY Price Chart - 240min Timeframe

Notes:A closer look at price action highlights a near-term pitchfork formation extending off the off the August / September lows with a break below the median-line today shifting the immediate focus lower in the pair. Interim support is being tested here at 111.99 with a break lower targeting 111.10 backed closely by 110.67/82 – both regions of interest for possible exhaustion / long-entries.

The pair remains at risk while below interim resistance at the weekly opening-range highs at 112.83 with a breach above 113.43 needed to mark resumption of the broader up-trend. Bottom line: I’ll be looking to fade strength while below the median-line with a decline into structural support to offer favorable long-entries.

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USD/JPY IG Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-short USDJPY- the ratio stands at -1.4 (41.6% of traders are long) – Weak bullishreading
  • Long positions are .1% higher than yesterday but 12.4% lower from last week
  • Short positions are 17.3% higher than yesterday and 31.1% higher from last week.
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USDJPY-bullish contrarian trading bias from a sentiment standpoint.

See how shifts in USD/JPY retail positioning are impacting price trends- Click here to learn more about sentiment!

Relevant Data Releases

USD/JPY Economic Calendar

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Other Setups in Play

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com.