USD/JPY Runs into Resistance. Will Reversal Follow?

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Japanese Yen, USD/JPY, IG Client Sentiment – Technical Forecast

  • Japanese Yen exhibiting early indicators of resistance towards the US Dollar
  • USD/JPY remains to be arguably in an uptrend wanting on the 4-hour setting
  • Retail merchants proceed boosting brief publicity, seemingly a bullish sign

USD/JPY Technical Analysis – Daily Chart

Following a tough interval in July, the US Dollar has been slowly regaining its footing towards the Japanese Yen. Last week was one of the best for USD/JPY (+2.58%) since early June. Now, it appears the pair is establishing resistance round 137.65. This doesn’t essentially imply {that a} reversal is likely to be upon us, however moderately one thing that merchants may wish to watch carefully.

A Bearish Engulfing candlestick sample was additionally left behind earlier this week, however draw back affirmation has been missing. Immediate assist seems to be the 38.2% Fibonacci extension at 135.37. A breakout beneath this worth might open the door to extending losses. That would subsequently place the give attention to the 100-day Simple Moving Average (SMA).

The latter might nonetheless maintain as key assist, reinstating what has been the dominant uptrend for the reason that starting of 2021. Further features would expose the July excessive at 139.39 the place USD/JPY can have an opportunity to renew the uptrend. Such an end result would expose the 78.6% and 100% extensions at 140.63 and 143.42 respectively.

Chart Created in TradingView

4-Hour Chart

Zooming in on the 4-hour chart may give us a greater thought of how resistance is shaping up. Taking a Fibonacci retracement of the July transfer, we will see that costs have been unable to pierce the 78.6% stage at 137.46. Even so, the 50-period SMA remains to be under USD/JPY. This exhibits that the uptrend since August stays in play. Clearing this line might open the door to a near-term reversal. In such an end result, maintain an in depth eye on the midpoint, 38.2% and 23.6% ranges at 134.89, 133.83 and 132.52 respectively. Further losses would place the give attention to the August low at 130.40.

Japanese Yen Technical Analysis: USD/JPY Runs into Resistance. Will Reversal Follow?

Chart Created in TradingView

USD/JPY Sentiment Outlook – Bullish

The IG Client Sentiment gauge (IGCS) exhibits that about 26.13% of retail merchants are net-long USD/JPY. IGCS tends to perform as a contrarian indicator. Since the overwhelming majority of traders are leaning brief on the trade price, this appears to counsel that costs could proceed rising. This is as draw back publicity elevated by 7.34% and 15.30% in comparison with yesterday and final week respectively. With that in thoughts, the mix of present and up to date shifts in sentiment is producing a stronger bullish contrarian bias.

Japanese Yen Technical Analysis: USD/JPY Runs into Resistance. Will Reversal Follow?

*IG Client Sentiment Charts and Positioning Data Used from August 24th Report

— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the feedback part under or @ddubrovskyFX on Twitter





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