USD/JPY Price Outlook: Is a Low in Place?

The Japanese Yen has pared some of a new gains with USD/JPY now probing initial insurgency on this rebound. The doubt stays on either a low is in after cost topsy-turvy off a privileged totalled design this week- a concentration is on probable disaster only aloft with a pullback to offer clarity on either this allege is a improvement or a incomparable change in trend.

USD/JPY Daily Price Chart

USD/JPY Price Chart - Daily Timeframe

Technical Outlook: In this week’s Technical Perspective, we highlighted that, “The Japanese Yen might be staid for serve strength (USD/JPY lower) after violation next slope support (red) final week. Note that movement does demeanour a bit sleepy here and a probability for a near-term liberation remains- that said, demeanour for insurgency forward of final week’s high / a Mar open during 106.64/66.

Price has been trade within a proportions of extended forward pitchfork formation fluctuating off a Nov highs with cost posting an outside-day annulment off a reduce 50-line yesterday. The miscarry is now contrast initial insurgency during a median-line and we’re looking for initial depletion here. IF cost breaches, demeanour for an extended liberation towards 106.38 106.66(also areas of interest for entries). Broader bearish cancellation is solid during 107.45/84 a crack there would advise a some-more poignant low is in place. A mangle next a weekly open puts a bears behind in control targeting connection support during 104.32 corroborated by vicious long-term support during 103.04/40.

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USD/JPY 240min Price Chart

USD/JPY Price Chart - 240min Timeframe

Notes: A closer demeanour during near-term cost movement serve highlights near-term insurgency here during 105.88 where a 38.2% retracement converges on former trendline support. Note that momentum has continued to reason sub-60 and we’ll wish to see this condition reason for a stream short-bias to sojourn viable. Interim support rests during 105.25 with a mangle next a 100% prolongation during 104.64 targeting 104.32 backed by a 103.48.

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Bottom line: We’re looking for signs of depletion on this miscarry forward of 106.66 for a pullback. From a trade standpoint, I’d be looking for one some-more high before things start to spin over. Ultimately, a mangle next yesterday’s NY low during 104.91 would be need to symbol resumption. A spin / miscarry forward of that segment would advise a incomparable liberation is underway.

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USD/JPY IG Client Positioning

USD/JPY Client Sentiment

  • A outline of IG Client Sentimentshows traders are net-long USDJPY- a ratio stands during +2.59 (72.9% of traders are long) –bearishreading
  • Retail has remained net-long given Dec 29th; cost has changed 7% reduce given then
  • Long positions are 5.6% reduce than yesterday and 8.3% reduce from final week
  • Short positions are 5.3% reduce than yesterday and 3.6% aloft from final week
  • We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests USDJPY prices might continue to fall. Yet traders are reduction net-long than yesterday and compared with final week. Recent changes in view advise that a stream USDJPY cost trend might shortly retreat aloft notwithstanding a fact traders sojourn net-long.

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– Written by Michael Boutros, Currency Strategist with DailyFX

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