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USD/JPY Daily Chart

USD/JPY Price Chart - Daily Timeframe

Technical Outlook:USD/JPY is trading just below a critical resistance barrier at 114.30/50- a region defined by the 61.8% retracement of the yearly range and the May and July swing highs. The focus is on this key threshold heading into tomorrow’s U.S. Non-Farm Payrolls (NFP) report and the November open.

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Daily support rests back at the October open at 112.65 with broader bullish invalidation down at 111.60/72 (key support confluence). A breach higher from here targets 115.44/52 where the 61.8% retracement of the broader 2015 decline converges on the 61.8% extension of the advance off the September lows. Subsequent targets eyed at the yearly open at 116.98 which converges on the 50-line later this month.

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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 ascending median-line formation extending off August & September lows with price opening the month just below key resistance. From a trading standpoint, the immediate advance remains vulnerable while below this threshold with near-term support eyed at 113.05. A break below the October open at 112.64 would be needed to validate a near-term reversal with such a scenario targeting initial support objectives at 111.73 & 110.67/82.

Bottom line: the immediate focus is on a break of the 113-114.50 range to offer guidance on our medium-term directional bias. Ultimately a lager pullback would offer more favorable long-entries lower down.

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USD/JPY Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-short USDJPY- the ratio stands at -1.3 (43.5% of traders are long) – Weak bullishreading
  • Long positions are 18.8% lower than yesterday and 14.7% lower from last week
  • Short positions are 3.3% higher than yesterday and 3.4% 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 trend- Click here to learn more about sentiment!

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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.