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Yen Technical Price Outlook: USD/JPY Breakout Testing Trend Extremes

Yen Technical Price Outlook: USD/JPY Breakout Testing Trend Extremes

Michael Boutros, Strategist

Japanese Yen Technical Price Outlook: Near-term Trade Levels

  • Japanese Yen technical trade levels update – Daily & 120min Charts
  • USD/JPY breakout extends two-equal legs up- rally vulnerable into trend resistance
  • Constructive while above 107.65 - resistance steady at 107.69

The Japanese Yen is poised to mark the fourth consecutive daily loss and the fourth weekly decline against the US Dollar with USD/JPY rallying more than 1.2% into the June open. These are the updated targets and invalidation levels that matter on the USD/JPY technical price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen trade setup and more.

Japanese Yen Price Chart – USD/JPY Daily

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

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

Technical Outlook: In my last Japanese Yen Price Outlook we noted that USD/JPY was “approaching near-term uptrend support and a hold above 106.42 is needed to keep the breakout viable in the days ahead.” That level held into the close of the month with an early June breakout taking broke back above the objective yearly open at 108.62. The advanced failed at the upper parallel today with key confluence resistance eyed just higher at 109.53/67- a region defined by the 2019 yearly open and the 61.8% retracement of the late-March decline. We’ll be on the lookout for a larger reaction there IF reached.

Japanese Yen Price Chart – USD/JPY 120min

Japanese Yen Price Chart - USD/JPY 120min - Trade Outlook - Technical Forecast

Notes: A closer look a Yen price action shows USD/JPY trading within the confines of a near-term ascending channel with price stalling today just above the upper parallel. Note that the advance turned just pips from the 100% extension of the May rally at 109.17. Initial support now 108.65 backed by 107.95-108.09. Near-term bearish invalidation now raised to the weekly / June open at 107.66- be on the lookout for downside exhaustion ahead of this threshold IF price is indeed heading higher.

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 is approaching medium-term uptrend resistance and while the outlook remains constructive, the advance may be vulnerable near-term while below confluence resistance. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch into 109.52/68 – look for a more significant reaction there for guidance with a close above needed to keep the focus on 110.50. Ultimately, a close below the May open at 107.13 would be needed to put the bears back in control. Review my latest Japanese Yen Weekly Price Outlook for a closer look at the longer-term USD/JPY technical trade levels.

Japanese Yen Trader Sentiment – USD/JPY Price Chart

Japanese Yen Trader Sentiment - USD/JPY Price Chart
  • A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +1.14 (53.28% of traders are long) – neutral reading
  • Long positions are4.56% lower than yesterday and 8.50% lower from last week
  • Short positions are 4.89% lower than yesterday and 15.08% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/JPY-bearish contrarian trading bias from a sentiment standpoint.

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Key US / Japan Data Releases

Key US / Japan Data Releases - USD/JPY Economic Calendar

Economic Calendar - latest economic developments and upcoming event risk.

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--- 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.

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