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Japanese Yen Price Targets: USD/JPY Breakout Pending- Trade Levels

Japanese Yen Price Targets: USD/JPY Breakout Pending- Trade Levels

2019-08-29 15:30:00
Michael Boutros, Technical Strategist

The Japanese Yen is down nearly 1% against the US Dollar this week with USD/JPY now testing near-term downtrend resistance. The immediate focus is on a break of a well-defined weekly opening range in price. These are the updated targets and invalidation levels that matter on the USD/JPY charts heading into the close of August trade. Review this week's Strategy Webinar for an in-depth breakdown of this silver price setup and more.

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Yen Price Chart – USD/JPY Daily

Yen Price Chart - USD/JPY Daily - US Dollar vs Japanese Yen Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview

Technical Outlook: In last month’s USD/JPY Price Outlook our ‘bottom line’ noted that we favored “fading a spike higher” as price was approaching downtrend resistance (109.42) at the upper parallel of the descending pitchfork formation we’ve been tracking off the yearly highs. USD/JPY registered a high at 109.31 into the start of the month before reversing sharply lower with the decline rebounding off parallel support this week.

Initial daily resistance stands with the median-line; a topside breach / close above the June lows at 106.78 is needed to suggest a more significant low was registered this week with such a scenario exposing the 75% parallel backed by the 2017 low-day close at 107.83. Key support rest with the lower parallel, which converges on the January lows at 104.65 – weakness beyond this threshold would likely see accelerated losses for the greenback targeting 103.48.

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Yen Price Chart – USD/JPY 240min

Yen Price Chart - USD/JPY 240min - US Dollar vs Japanese Yen Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview

Notes: A closer look at Yen price action sees USD/JPY trading within a well-defined weekly opening-range just below the median-line. A topside breach exposes subsequent resistance objectives at the June low at 106.78 backed by the Fibonacci confluence at 107.45/48 (61.8% retracement of the August range / 38.2% retracement of the 2019 yearly range) – look for a bigger reaction there IF reached.

Initial support rests with the May ow at 105.55 backed by the weekly open at 104.97. Ultimately a break below the yearly swing low at 104.65 is needed to mark resumption of the broader downtrend.

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

Bottom line: USD/JPY has set a clean weekly opening range just below downtrend resistance and we’re looking for the break for guidance on our near-term directional bias. From a trading standpoint, a good place to raise protective stops - we’re looking for a reaction here at the median-line. Ultimately a topside breach may offer more favorable short-entries closer to trend resistance. IF price fails here, look for a move below the May lows to validate a larger decline targeting the lower parallels. Review my latest Japanese Yen Weekly Price Outlook for a longer-term look at the technical picture for USD/JPY.

Japanese Yen Trader Sentiment – USD/JPY Price Chart

Japanese Yen Trader Sentiment - USD/JPY Price Chart - Trade Outlook -Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +1.55 (60.7% of traders are long) – bearish reading
  • Traders have remained net-long since May 3rd; price has moved 4.9% lower since then
  • The percentage of traders net-long is now its lowest since July 29th
  • Long positions are 2.5% lower than yesterday and 3.7% lower from last week
  • Short positions are10.8% higher than yesterday and 15.7% 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 & compared with last week and the 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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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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