The Japanese Yen is down more than 0.8% against the US Dollarthis week with USD/JPY rallying to levels not seen since May. The advance takes price back into a critical resistance range we’ve been taking for months now and leaves the immediate rally vulnerable heading into the start of December trade. 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 Sterling price setup and more.
Japanese Yen Price Chart – USD/JPY Weekly
Notes: In my latest Japanese Yen Price Outlook we noted that USD/JPY was approaching a critical resistance zone at 109.36/68 – “a region defined by the 61.8% retracement of the yearly range, the March low / July high, and the objective yearly open.” Price is once again testing this key resistance barrier with USD/JPY rallying to fresh six-month highs into the yearly on at 109.68.
We’re looking for a reaction here- a breach / close above is needed to keep the immediate long-bias viable targeting the next major resistance barriers at 110.52 and the uncovered close at 111.05– expect a larger reaction there IF reached. Initial weekly support rests with the channel with near-term bullish invalidation with the 2017 low-week close at 107.84 – a close below this threshold would risk another test of the yearly low-week close at 106.25.
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 once again testing critical yearly open resistance at 109.68 and we’re looking for a reaction. From at trading standpoint, the immediate advance may be vulnerable while below this threshold. A good spot to reduce long-exposure / raise protective stops- be on the lookout for possible exhaustion while below this threshold into the start of November trade. 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
- A summary of IG Client Sentiment shows traders are net-short USD/JPY – the ratio stands at -1.43 (41.22% of traders are long) – bullish reading
- Long positions are2.14% lower than yesterday and 10.84% lower from last week
- Short positions are 11.54% higher than yesterday and 30.01% 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. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/JPY-bullish contrarian trading bias from a sentiment standpoint.
See how shifts in USD/JPY retail positioning are impacting trend- Learn more about sentiment!
Previous Weekly Technical Charts
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex