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Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Daniel Dubrovsky, Contributor
What's on this page

Japanese Yen, Swiss Franc, USD/JPY, USD/CHF, Technical Analysis, Retail Trader Positioning - Talking Points

  • Retail trader bets hint USD/JPY and USD/CHF may fall in the near-term
  • Technical signals seem bearish, but broader uptrends since January hold
  • Check out my webinar recording on IGCS to learn how to use it in trading
How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
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How is IG Client Sentiment a contrarian indicator?
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In this week’s webinar on IG Client Sentiment (IGCS), I discussed the outlook for the Japanese Yen and Swiss Franc against the US Dollar. IGCS is typically a contrarian indicator. For detailed analysis, check out the recording of the session above, where I discussed how to use IGCS in a trading strategy as well as covering the fundamental outlook for USD/JPY and USD/CHF.

USD/JPY Sentiment Outlook - Bearish

The IGCS gauge implies that about 48% of retail investors are net long USD/JPY. Upside exposure has decreased by 1.55% while increasing 20.63% over a daily and weekly basis respectively. The fact traders are net short suggests prices may rise. But, recent changes in sentiment warn that USD/JPY could have more room to extend losses.

How to Trade USD/JPY
How to Trade USD/JPY
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How to Trade USD/JPY
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USD/JPY Sentiment Outlook - Bearish

Japanese Yen Technical Analysis

USD/JPY recently pierced through the former 109.38 – 109.85 resistance zone, extending March’s top. The pair took out the 20-day Simple Moving Average (SMA) and is now eyeing the March 23rd low. Beyond that, the 50-day SMA could come into play as a pivotal support point. Bouncing off the latter could open the door for the Japanese Yen to extend losses from the beginning of this year.

USD/JPY Daily Chart

USD/JPY Daily Chart

Chart Created in Trading View

USD/CHF Sentiment Outlook - Bearish

The IGCS gauge implies that roughly 73% of retail traders are net long USD/CHF. Upside exposure has increased by 2.33% and 32.90% over a daily and weekly basis respectively. The fact that traders are net long suggests prices may fall, and the combination of recent changes in sentiment offers a stronger bearish contrarian trading bias.

USD/CHF Sentiment Outlook - Bearish

Swiss Franc Technical Analysis

From a technical standpoint, USD/CHF seems increasingly vulnerable to extending recent losses. The Swiss Franc has taken out the 20-day SMA and has since confirmed a daily close under key support at 0.9214. That has placed the focus on the 50-day SMA where it could come into play as pivotal support. Otherwise, taking it out subsequently exposes the midpoint of the Fibonacci retracement at 0.9115.

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USD/CHF Daily Chart

USD/CHF Daily Chart

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from April 13th Report

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

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