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Japanese Yen Price Outlook: USD/JPY Range Breakout Imminent

Japanese Yen Price Outlook: USD/JPY Range Breakout Imminent

Michael Boutros, Strategist

Japanese Yen Technical Price Outlook: DXY Weekly Trade Levels

  • Japanese Yen technical trade levels update – Weekly Chart
  • USD/JPY immediate focus is on a break of weekly / monthly opening-ranges
  • Broader outlook vulnerable while below yearly open resistance at 108.62

The Japanese Yen is poised to mark the second consecutive weekly advance against the US Dollar with USD/JPY off fractionally ahead of the New York close on Friday. Price action has been largely range-bound this week / month with USD/JPY trading just below the monthly open. While we look to a break of the April range for guidance, the threat remains for a broader pullback in price while below the objective 2020 open. These are the updated targets and invalidation levels that matter on the USD/JPY weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen trade setup and more.

Japanese Yen Price Chart – USD/JPY Weekly

Japanese Yen Price Outlook: USD/JPY Range Breakout Imminent

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

Notes:In last month’s Japanese Yen Weekly Price Outlook we noted that the, “USD/JPY breakdown has responded to confluence downtrend support this week and while we could see further recovery in the weeks ahead, the broader risk remains weighted to the downside after last month’s failed attempt to breach slope resistance.” Price surged a staggering 10.4% in just two weeks before failing yet again at the upper parallel of the broad descending pitchforkformation we’ve been tracking for the past several years. USD/JPY is down more than 3.7% off that high with prices contracting within the April opening-range. In fact, price is trading just pips above the objective monthly open at 107.49 into the close of the week with weekly RSI flat-lining just below 50.

Yearly open resistance stands at 108.62 backed by the 2019 open at 109.68- a breach / close above this threshold would be needed to once again challenge slope resistance. Ultimately, broader bearish invalidation remains with the 2019 / 2020 high-week closes at 111.54/60. A break below the April range would expose subsequent support objectives at 106.45 backed by the 61.8% retracement of the March rally at 105.20- look for a bigger reaction there IF reached.

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 remains in contraction after this recent move and the immediate focus is on a break of the monthly opening-range. That said, from a trading standpoint, look for topside exhaustion while below the yearly open IF price is indeed heading lower with a break below 105.20 needed to fuel the next leg of the broader downtrend. I’ll publish and 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

Japanese Yen Price Outlook: USD/JPY Range Breakout Imminent
  • A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +1.18 (54.10% of traders are long) – neutral reading
  • Long positions are2.59% higher than yesterday and 10.26% lower from last week
  • Short positions are 3.57% higher than yesterday and 8.07% lower 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. From a sentiment standpoint, the recent changes in positioning warn that the current USD/JPY price trend may soon reverse higher despite the fact traders remain net-long.


Previous Weekly Technical Charts

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

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.