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Japanese Yen Technical Forecast: USD/JPY Breakout Flies to 24yr Highs

Japanese Yen Technical Forecast: USD/JPY Breakout Flies to 24yr Highs

Michael Boutros, Strategist

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

  • Japanese Yen technical trade levels update – Weekly Chart
  • USD/JPY breakout approaching uptrend resistance at multi-decade highs
  • Support 138.48, 1.35 (key), 132.24 - Resistance 146.23-147.67 (key), 149.07, 150
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The US Dollar surged more than 14.3% against the Japanese Yen from the June lows with USD/JPY rocketing to fresh 24-year highs. The rally is attempting to mark a fourth consecutive weekly advance with initial weekly resistance eyed just higher into the close of the week. 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 USD/JPY technical setup and more.

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Japanese Yen Price Chart – USD/JPY Weekly

Japanese Yen Price Chart - USD/JPY Weekly - US Dollar vs Japanese Yen Trade Outlook - USDJPY Technical Forecast

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

Technical Outlook: USD/JPY ripped through resistance last week at the July high-week close / 88.6% Fibonacci retracement of the 1998 decline at 138.48-139.45. The subsequent breakout has already extended more than 3.8% with the advance now eyeing the next major technical threshold at the 1998 high-week close / swing high at 146.23-147.67- an area of interest for possible topside exhaustion / price inflection. Note that the upper parallel (blue) of the multi-year ascending pitchfork formation extending off the 2016 & 2021 lows also extends into this zone over the next few months and we’re looking for a reaction off this mark.

A topside breach / close above is needed to keep the immediate long-bias viable with such a scenario exposing subsequent resistance objectives at the 100% extension of the 2011 advance (149.07) and the 150-handle, and the 1998 high at 151.90. Initial weekly support now rests back at 138.48 with the broader bullish invalidation now raised to yearly slope support (red), currently near the 135-handle.

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Bottom line: The USD/JPY breakout has extended more than 25% year-to-date and while the broader outlook remains tilted to the topside, the advance is approaching areas of interest for possible technical resistance just higher. From at trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 146.23-147.67 IF reached – losses should be limited to the 2022 slope (red) IF price is heading higher with a close above likely to fuel another accelerated rally for the greenback. Use caution heading into the FOMC rate decision later this month- expect volatility and stay nimble. 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 - US Dollar vs Japanese Yen Trader Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short USD/JPY - the ratio stands at -3.21 (23.74% of traders are long) – typically bullish reading
  • Long positions are1.59% higher than yesterday and 3.57% higher from last week
  • Short positions are1.18% higher than yesterday and 12.37% higher 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 less net-short than yesterday but more net-short from last week. The combination of current positioning and recent changes gives us a further mixed USD/JPY trading bias from a sentiment standpoint.
USD/JPY Mixed
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 12% -1% 2%
Weekly -13% 7% 2%
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--- Written by Michael Boutros, Technical Strategist with DailyFX

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

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