Japanese Yen Technical Price Outlook: DXY Weekly Trade Levels
- Japanese Yen technical trade levels update – weekly chart
- USD/JPY threatens breakout of multi-year downtrend resistance
- Price rally targeting initial objectives into the 2019 high-week close
The Japanese Yen has been on the defensive against the US Dollar for the past three weeks with USD/JPY rallying more than 2.6% off the monthly lows. The rally takes price through long-term downtrend resistance and threatens a larger shift the broader outlook IF price can mark a weekly close at these levels- simply put, we’re looking for validation. These are the updated targets and invalidation levels that matter on the USD/JPY weekly price chart heading into the start of January trade. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
Japanese Yen Price Chart – USD/JPY Weekly
Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview
Notes: In our last Japanese Yen Weekly Price Outlook we noted that USD/JPY breakdown was, “testing the first major support zone into the start of the year at 107.71/84- look for a reaction here early in the month…” Price briefly registered a low at 107.65 before reversing sharply higher with the advance breaching resistance at the upper parallel of a broad multi-year descending pitchfork formation we’ve been tracking of the 2015 / 2017 highs. Is the breakout legit?
The focus is on the weekly close to validate with subsequent topside resistance objectives eyed at the 2019 high-week close at 111.54 and the 78.6% retracement / 2018 open / 2019 swing high at 112.39/59- look for a more significant reaction there IF reached. Initial support now back at 110.69 with bullish invalidation now set to the 2019 open at 109.68.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: The USD/JPY breakout is approaching initial resistance targets just higher. Look for a weekly close above 110.69 to validate the breakout / keep the long-bias in play. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of 111.54- look for a reaction there for guidance. Ultimately, we’re on the lookout for downside exhaustion while above the yearly opening-range highs (110.30s) IF the Dollar is indeed heading higher. A close back below channel resistance would highlight the threat of a false-break scenario- use caution here. I’ll publish an updated Japanese Yen Price Outlook once we get further clarity on the near-term USD/JPY technical trade levels.
Japanese Yen Trader Sentiment – USD/JPY Price Chart
- A summary of IG Client Sentiment shows traders are net-short USD/JPY - the ratio stands at -1.36 (42.37% of traders are long) – weak bullish reading
- Long positions are3.63% lower than yesterday and 10.39% lower from last week
- Short positions are 12.16% lower than yesterday and 0.55% lower 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. Yet traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed USD/JPY trading biasfrom a sentiment standpoint.
| Change in | Longs | Shorts | OI |
| Daily | 13% | 8% | 9% |
| Weekly | 29% | -19% | -10% |
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Previous Weekly Technical Charts
- US Dollar Index (DXY)
- Canadian Dollar (USD/CAD)
- Sterling (GBP/USD)
- Gold (XAU/USD)
- New Zealand Dollar (NZD/USD)
- Euro (EUR/USD)
- Australian Dollar (AUD/USD)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
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