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Japanese Yen Outlook: USD/JPY Dives into Key Technical Support Pivot

 The Japanese Yen is attempting to mark a 3rd consecutive weekly advance against the US Dollar with USD/JPY down 0.34% before the ny close on Wednesday. an opportunity of the October monthly opening-range lows takes price into a pivotal support zone and leaves the immediate decline vulnerable near-term. 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 Yen trade setup and more.


Notes: In our last Japanese Yen Weekly Price Outlook we highlighted that USD/JPY was in danger for further losses with key support eyed lower at 104.12/46- a neighborhood defined by the 100% Fibonacci extension of the March decline and therefore the 2019 swing low. We note to, “–be on the lookout for topside exhaustion before 106.48 IF price is heading lower with an in depth below 104.12 ultimately needed to mark resumption.” USD/JPY briefly registered a coffee at 104 in September before rebounding with the rally faltering before yearly channel resistance into the October open (high registered at 106.11).


A three week decline takes price back to this critical support barrier for the third time in as many months and we’re trying to find inflection off this threshold. an opportunity / weekly close below would be needed to mark resumption of the broader downtrend towards the 78.6% Fibonacci retracement of the March rally at 103.43. Weekly resistance now stands at the March channel line / October high-week close at 105.59- an in depth above this threshold would be needed to shift the medium-term focus back to the topside in USD/JPY with subsequent resistance objectives eyed at 106.48 and 107.62.


Bottom line: A downside break of the October opening-range in USD/JPY takes price into a critical support pivot before the monthly close. From a trading standpoint, an honest zone to scale back short exposure / lower protective stops – get on the lookout for topside exhaustion before 105.59 IF price is indeed heading lower with an in depth below 104.12 still needed to stay the immediate short-bias viable. many event risk on tap heading into the US Presidential Elections next week - stay nimble here and appearance for inflection off this zone. I’ll publish and updated Japanese Yen Price Outlook once we get further clarity on the near-term USD/JPY technical trade levels.


A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +2.40 (70.57% of traders are long) – bearish reading

Long positions are13.04% above yesterday and 31.61% higher from last week

Short positions are 20.00% less than yesterday and 0.61% lower from last week

We typically take a contrarian view to crowd sentiment, and therefore the fact traders are net-long suggests USD/JPY prices may still fall. Traders are further net-long than yesterday and last week, and therefore the combination of current positioning and up to date changes gives us a stronger USD/JPY-bearish contrarian trading bias from a sentiment standpoint.

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