USD/CHF Daily Chart
Technical Outlook: USDJPY turned from median-line resistance last week after failing to punch through basic trendline resistance extending off the yearly high. The focus is on near-term confluence support at 111.86/99– a region defined by the 23.6% retracement and the 200-day moving average.
A break below this threshold (favored) targets more significant support at 111.10 where the 38.2% retracement converges on the 100-day moving average and the 50-line of the ascending pitchfork. A breach above the median-line would invalidate the short-bias with such a scenario targeting a critical resistance range at 114.37/61.
USD/JPY 240min Chart
Notes:A closer look at price action highlights a near-term pitchfork formation extending off the off the August / September lows with a break below the median-line today shifting the immediate focus lower in the pair. Interim support is being tested here at 111.99 with a break lower targeting 111.10 backed closely by 110.67/82 – both regions of interest for possible exhaustion / long-entries.
The pair remains at risk while below interim resistance at the weekly opening-range highs at 112.83 with a breach above 113.43 needed to mark resumption of the broader up-trend. Bottom line: I’ll be looking to fade strength while below the median-line with a decline into structural support to offer favorable long-entries.
- A summary of IG Client Sentiment shows traders are net-short USD/JPY- the ratio stands at -1.4 (41.6% of traders are long) – Weak bullish reading
- Long positions are .1% higher than yesterday but 12.4% lower from last week
- Short positions are 17.3% higher than yesterday and 31.1% 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.
