USD/JPY Retail Sentiment Shifts, RSI Snaps Bullish Trend Ahead Of FOMC

The drop in net-short position points to profit-taking behavior ahead of the Fed rate decision, but the sharp rise in net-long interest suggests retail traders are betting on the November range to hold over the days ahead, with the shift in the IG sentiment index offering a contrarian view to crowd sentiment especially as USD/JPY snaps the upward trend from earlier this year.

Moreover, the series of failed attempt to test the 2018-high (114.55) warns of a larger pullback, with the Relative Strength Index (RSI) starting to flash a bearish signal as it threatens trendline support.

USD/JPY DAILY CHART

(Click on image to enlarge)

Image of usdjpy daily chart

  • Keep in mind, the near-term outlook for USD/JPY remains capped by the 113.80 (23.6% expansion) to 114.30 (23.6% retracement) region, with the lack of momentum to test the 2018-high (114.55) raising the risk for a further decline in the exchange rate as it carves a series of lower highs & lows.
  • In turn, the 112.40 (61.8% retracement) to 113.00 (38.2% expansion) region sits on the radar, with a close below the stated region raising the risk for a move towards 111.10 (61.8% expansion) to 111.80 (23.6% expansion), which lines up with the October-low (111.38).
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For more in-depth analysis, check out the Q4 Forecast for the Japanese ...

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