Japanese Yen Weekly Price Outlook: Pending USD/JPY Range Break

In this series, we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. Despite early-year volatility, the US Dollar is virtually unchanged against the Japanese Yen with price trading within a well-defined range just below the yearly moving-average. Here are the key targets & invalidation levels that matter on the USD/JPY weekly chart.

USD/JPY WEEKLY PRICE CHART (LOG)

(Click on image to enlarge)

USD/JPY Price Chart - US Dollar vs Japanese Yen Weekly

Notes: USD/JPY collapsed into the close of 2018 with price briefly testing the yearly range lows in early January before rebounding sharply. Note that price has continued to respect (weekly close basis) a critical support zone at 107.84 - 108.43– a region defined by the 2017 low-week reversal close and key the 61.8% retracement of the 2018 range.

Initial weekly resistance stands with the 2015 trendline (blue) backed closely by the 52-week moving average at ~110.20s. A breach/close above this zone is needed to suggest a more significant low was registered last month with such a scenario targeting the 61.8% retracement of the decline at 110.77 backed by the 200-week moving average / 2018 yearly open at 112.45/59. A downside break of this range targets 106.75 and the 2013 trendline (red).

Bottom line: USD/JPY has continued to hold a well-defined range between 107.84 - 110.20 and we’re looking for the break for guidance. From a trading standpoint, the bearish bias remains vulnerable while above this key support zone with a topside breach needed to keep the reversal play viable. I’ll publish an updated USD/JPY Price Outlook once we get further clarity on the near-term trading levels.

USD/JPY TRADER SENTIMENT

USD/JPY Trader Sentiment

  • A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +1.05 (51.3% of traders are long) – neutral reading
  • Long positions are 1.3% lower than yesterday and unchanged from last week
  • Short positions are1.8% higher than yesterday and 0.6% 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. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/JPY trading bias from a sentiment standpoint
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