- USD/JPY recovery testing first major resistance hurdle- price remains constructive above 110.59
- Check out our 3Q projections in our Free DailyFX USD/JPY Trading Forecasts
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The Japanese Yen has been under considerable pressure over the past few days after price (USD/JPY) responded to a key support confluence. Here are the updated targets and invalidation levels that matter on the USD/JPY charts heading into Jackson Hole this weekend. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
USD/JPY Daily Price Chart
Technical Outlook: In my latest Analyst Pick on USD/JPY, we noted that our focus was, “on a drive in to a critical support confluence at, 109.80/91 where the 100 & 200-day moving averages converge on the 38.2% retracement of the March advance and pitchfork support. Look for a reaction there.” Price registered a low at 109.78 early in the week before reversing sharply with the advance now targeting initial resistance hurdles which IF cleared, fuel further upside in price. A daily close above 111.40/48 would be needed to suggest a more Signiant low is in place with such a scenario targeting the monthly open at 111.87.
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USD/JPY 240min Price Chart
Notes: A closer look at USD/JPY price action further highlight this week’s reversal off key support at 109.91 with breach above August trendline resistance shifting the near-term focus higher in price. Immediate resistance targets are eyed at 111.26 backed by 111.40 where the May high converges on the 50-line – looking for near-term exhaustion off one of these levels. Interim support rests at 1110.79 with bullish invalidation at the weekly open at 110.59- a break below this level would once again look for a challenge of slope support.
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Bottom line: The reversal in price off confluence support this week risks further upside but the immediate advance looks vulnerable near-term heading into 111.48. From a trading standpoint, looking for near-term exhaustion into these upcoming resistance targets with a pullback likely to offer long-entries above 110.59 for a final stretch higher in the days.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
USD/JPY Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +1.09 (52.1% of traders are long) – weak bearishreading
- Traders have remained net-long since July 23rd; price has moved 1.1% lower since then
- The percentage of traders net-long is now its lowest since July 19th
- Long positions are11.4% lower than yesterday and 15.5% lower from last week
- Short positions are 5.7% lower than yesterday and 5.9% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/JPY price trend may soon reverse higher despite the fact traders remain net-long.
See how shifts in USD/JPY retail positioning are impacting trend- Learn more about sentiment!
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Relevant USD/JPY Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide !
Other Trade Setups in Play
- Gold Price Outlook: XAU/USD Reversal Constructive Above 1180
- EUR/USD Price Outlook: Euro Constructive Above 1.14
- AUD/USD Price Outlook: Aussie Recovery Faces Major Resistance Hurdle
- USD/CHF Price Outlook: Pending Swissy Technical Breakout
- Crude Oil Price Analysis: Sell-off Approaching Key Support Targets
- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com
