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Japanese Yen Forecast: USD/JPY Breakout Targets Critical Resistance

Japanese Yen Forecast: USD/JPY Breakout Targets Critical Resistance

Michael Boutros, Strategist

Japanese Yen Technical Price Outlook: USD/JPY Weekly Trade Levels

  • Japanese Yen technical trade levels update – Weekly Chart
  • USD/JPY Breakout approaching critical uptrend resistance into July open / 3Q / NFP
  • Key Near-term resistance at 111.60/98 – Support 109.68
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The Japanese Yen is down more than 0.7% versus the US Dollar since the start of the week with USD/JPY attempting to mark a fourth consecutive weekly advance. While the broader price outlook remains constructive, the rally is now probing a critical resistance confluence and the bulls may be vulnerable while below this zone heading into the July / 3Q open with US Non-Farm Payrolls on tap tomorrow. These are the updated targets and invalidation levels that matter on the USD/JPY weekly price chart heading into NFP / the extended holiday break. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen technical setup and more.

Japanese Yen Price Chart – USD/JPY Weekly

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

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

Notes: In my last Japanese Yen Weekly Price Outlook (May) we noted that USD/JPY was, “again approaching resistance at a key infection zone at 109.68/92.” We were on breakout watch while noting a more critical, “resistance confluence at the 2019/2020 high-week closes / 61.8% retracement at 111.60/98,” – USD/JPY is testing this key zone into the July / 3Q open.

A breach / weekly close above 112 is needed to keep the advance viable with such a scenario exposing the 2018 high-week close at 113.70 and the 2018 high at 114.55. Weekly support rests back with the 25% median-line parallel / 2019 yearly open at 109.68 with broader bullish invalidation now raised to the 2017 low-week close at 107.83.

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 testing a pivotal technical resistance confluence into the open of the month / quarter. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops – look for downside exhaustion ahead of this week’s low IF price is indeed heading higher. Ultimately, a larger setback may offer more favorable opportunities closer to uptrend support with a close above 111.60/98 needed to mark resumption. NFPs are on tap into an extended holiday weekend- stay nimble into the close of the week. 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

Japanese Yen Trader Sentiment - USD/JPY Price Chart - Retail Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at -1.30 (43.45% of traders are long) – weak bullish/neutral reading
  • Long positions are2.50% higher than yesterday and 16.17% higher from last week
  • Short positions are 3.30% higher than yesterday and 8.84% 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 more net-short than yesterday but less net-short from last week, and the combination of current positioning and recent changes gives us a further mixed USD/JPY 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.

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.

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