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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Here are the key targets & invalidation levels that matter on the USD/JPY weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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USD/JPY Weekly Price Chart

USD/JPY Weekly Price Chart

Notes: For months now we’ve highlighted a critical resistance range in USD/JPY, “at 110.88-111.65- a region defined by the 61.8% retracement of the November sell-off and the 50% of the broader decline off the late-2016 high.” Price closed above this threshold last week and leaves the risk for a late-month high in USD/JPY.

That said, price is now testing yearly open resistance with the next major resistance target eyed at 113.20/30 where the 200-week moving average converges on the key 61.8% Fibonacci retracement of the late-2016 decline- look for a reaction there. Interim support now 111.65 with bullish invalidation back at 110.88.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: We’re checking yearly open resistance today and could get some kickback but the focus remains weighted to the topside towards confluence resistance just above the 113-handle. From a trading standpoint, look to reduce long-exposure heading into this regions and be on the lookout for possible near-term exhaustion short-entries late in the month. I’ll publish an updated USD/JPY scalp report in the days ahead once we get some more structure in near-term price-action after this breakout.

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USD/JPY Trader Positioning

USD/JPY Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-short USD/JPY - the ratio stands at -1.4 (41.6% of traders are long) – weak bullish reading
  • Traders have remained net-short since June 28th; price has moved 2.6% higher since then
  • Long positions are 5.3% higher than yesterday and 1.0% lower from last week
  • Short positions are1.4% higher than yesterday and 10.1% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise. Traders are less net-short than yesterday but more net-short from last week. The combination of current positioning and recent changes gives us a further mixed USD/JPY trading bias from a sentiment standpoint.

See how shifts in retail USD/JPY positioning are impacting trend- Learn more about sentiment!

Relevant USD/JPY Data Releases

USD/JPY Economic Calendar

Economic Calendar– for the latest economic developments and upcoming event risk

Previous Weekly Technical Perspectives

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

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