News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/ftrbRkFiJF
  • Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Learn about the top ten trading mistakes and how you can avoid them here: https://t.co/i8E2AXtzF3 https://t.co/Hny2HMYo4I
  • (Weekly Fundamental) Australian Dollar Outlook: Tied to Biden Stimulus Bets, S&P 500, US Dollar, Treasuries $AUDUSD #SP500 #stimulusbill #USD https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2021/01/16/Australian-Dollar-Outlook-Tied-to-Biden-Stimulus-Bets-SP-500-US-Dollar-Treasuries.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/H7aus0Aljt
  • The inside bar pattern occurs regularly within financial markets. Incorporating the inside bar strategy can enhance a trader's market analysis. Find out how more here: https://t.co/E3EWOYTYNw https://t.co/7zI3p6UNVs
  • Bank of Japan to mull widening of its long-term yield band -BBG $USDJPY
  • While the rise in longer-dated Treasury yields have been impressive as of late, March highs remain a key focus for resistance The medium-term uptrend remains intact, maintained by rising support from August Fading fiscal stimulus expectations (size) may sour yields ahead https://t.co/L3vBcF0ts7
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/vFJ8zmphMm
  • While the US Dollar has been holding its ground, its downside bias against the Singapore Dollar, New Taiwan Dollar Thai Baht and Indonesian Rupiah remains intact as it hovers at support. Get your market update from @ddubrovskyFX here: https://t.co/p7gAztWuVG https://t.co/zB1pOS6U4D
  • The $VIX is now running 227 trading days above the 20 handle. It is also working its way quickly into a dead-end descending triangle. These don't really break lower... https://t.co/39Pr7YrQ08
  • WTI Crude amongst the many market participants taking a hit today, down almost 3% $WTI $USD https://t.co/eg2phm1wUO
USD/JPY Technical Analysis: A Classic Downtrend Faces a Major Test

USD/JPY Technical Analysis: A Classic Downtrend Faces a Major Test

2016-06-10 17:55:00
Tyler Yell, CMT, Currency Strategist

To See How Live Clients Are Positioned In FX & Equities Click Here Now

Talking Points:

  • USD/JPY Technical Strategy: As Resistance Holds, Bears Get Confidence
  • 200-WMA at 105.95 Feels Like The ‘Line In the Sand’ For Abenomics
  • US Dollar Direction In Question Amidst A Very Volatile Month

The Great Technical Squeeze Is Upon Us

On June 05, 2015 all was right in the world of USD/JPY Bulls. We had a daily high of 125.85, and many thought 130s were just around the corner. Then a quiet summer became a scary summer when China devalued the Yuan to bring their currency into alignment with “market realities” and a deflationary shock was sent through global markets. The JPY seemed to take this even the hardest providing a price range of 919 pips over August, and continuing to fall through June.

Over the last year, USD/JPY has fallen ~16%, and it’s easy to say the worst may not be over. While members of the Bank of Japan have warned that they’re keeping an eye on the exchange rate, we could be entering into a cyclical bull market much like we saw in 2008-2011.

One such evidence of a JPY Bull Market lies at 105.95 and the 200-Week Moving Average. The last time the price of USD/JPY broke below the 200-Week Moving Average was in 2008 at the ~113 level where the price would eventually fall to 75.55 for a ~33% drop.

While we are almost assured not to see a similar decline, it’s fair to say that a seismic shift could be underway in USD/JPY. Not only would we need to hold support, but we’d need to break above resistance, which hasn’t been possible lately. Therefore, it’s difficult to say with confidence that we’ll come out of this continual cycle of JPY strength.

Naturally, such a development would also further the evidence against the success of Abenomics, which appeared to use a weak JPY as a foundation to bring the export-dependent Japan back to its former economic glory.

USD/JPY Has Run Into LT Moving Average Support

USD/JPY Technical Analysis: A Classic Downtrend Faces a Major Test

The long-term chart that goes back to May 2013 shows three key macro technical developments. As mentioned above, the most significant is the 200-week moving average that currently sits at 105.95. Second to the 200-WMA is the ~105 zone which has been a long-term price pivot since 2013. The 105 handle has acted as a polarity point, and a break below this level could show a larger shift that continues to favor JPY bullishness. Last, but not least is the corrective price channel (red) that is drawn off the June 2015 high and August/November pivots.

The price of USD/JPY has traded within this channel successfully with only temporary, yet failed pushes toward resistance. Should homeostasis remain with JPY strength and gradual US Dollar weakness, we would expect to stay in this channel only further down. Current channel resistance aligns with the late April and late May highs of 111.87/43.

While Oscillating Since Late April, Support Is Expected To Be Tested & Possibly Break

USD/JPY Technical Analysis: A Classic Downtrend Faces a Major Test

Key USD/JPY Technical Levels:

When considering the technical evidence above, it appears clear that the burden of proof lies on the Bulls of USD/JPY. There is currently a good deal more preference for the downside even though we’re coming into major support at the 105 zone.

For the Bulls to get bragging rights, the first level we’d like to see break is the Weekly Pivot at 108.14, which lies close the 38.2% retracement of the June range. A break above there would start to turn attention to the Weekly Pivot Resistance levels and ultimately the late April & May highs of 111.87 and 111.43 respectively.

Until those levels breaks, time is likely better spent on understanding downside scenarios. June is not making this easy for us (or maybe making it very easy) given the significant event risk with FOMC & the EU Referendum over the next two weeks. Should a risk-off event, at least in terms of heightened volatility, develop, it would not be unlikely to see 100 USDJPY. In fact, across the board, the Japanese Yen could see a week akin to late August that could be a death blow to remaining JPY bears.

However, USD/JPY SentimentShows Bulls Are Getting Confident

USD/JPY Technical Analysis: A Classic Downtrend Faces a Major Test

As of mid-day Friday, the ratio of long to short positions in the USDJPY stands at 2.94 as 75% of traders are long. Short positions are 4.9% lower than yesterday and 7.0% above levels seen last week. Open interest is 11.5% above its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives a signal that the USDJPY may continue lower. The trading crowd has grown further net-long from yesterday but moderated since last week.

Shorter-Term USD/JPY Technical Levels

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.

USD/JPY Technical Analysis: A Classic Downtrend Faces a Major Test

T.Y.

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

DISCLOSURES