USD/JPY Breakout- Bulls Drive For Seventh Day

Japanese Yen Technical Price Outlook: USD/JPY Weekly Trade Levels

  • Japanese Yen technical trade levels update – Weekly Chart
  • USD/JPY breakout extends into February open
  • Constructive while above 104.18 – Initial resistance objectives in view at 106

The Japanese Yen is off more than 0.7% against the US Dollar this week with a breakout in USD/JPY fueling a rally of more than 2.8% off the January lows. The advance is poised to mark a seventh consecutive day and while the broader focus remains tilted to the topside, the advance may be vulnerable in the weeks ahead as price approaches technical resistance just higher. These are the updated targets and invalidation levels that matter on the USD/JPY weekly price chart heading into NFPs tomorrow. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen trade setup and more.

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Japanese Yen Price Chart – USD/JPY Weekly

Japanese Yen Price Chart - USD/JPY Weekly - Dollar vs Yen Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview

Notes: In our last Japanese Yen Weekly Price Outlook we highlighted that USD/JPY was testing a critical support zone and to, “be on the lookout for topside exhaustion ahead of 105.59 IF price is indeed heading lower with a close below 104.12 still needed to keep the immediate short-bias viable.” Price registered a high at 105.67 in early November before plummeting more than 2.9% with the decline reversing course just pips ahead of the 88.6% Fibonacci retracement at 102.38 (low registered at 102.59).

A late-month breakout of the January opening-range has now rallied back above a key technical pivot zone at 104.18/46– a region defined by the 2020 low-week close and the July lows. The medium-term outlook remains weighted to the topside while above this threshold with initial resistance objectives now eyed at the 38.2% retracement / 1.618% extension at 106.07/25. Note that the median-line converges on this threshold over the next few weeks – look for a larger reaction there IF reached.

JPY Forecast

JPY Forecast

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Bottom line: A breakout of the March downtrend has been validated with the USD/JPY rally now approaching initial resistance objectives just higher. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of the median-line IF reached – ultimately a breach / close above 106.07/25 would be needed to keep the immediate advance viable. Monthly open support rests at 103.06 with bullish invalidation set to 104.18.Stay nimble here and watch the weekly close with US Non-Farm Payrolls on tap tomorrow. I’ll publish and updated Japanese Yen Price Outlook once we get further clarity on the near-term USD/JPY technical trade levels.

Japanese Yen Trader Sentiment – USD/JPY Price Chart

Japanese Yen Trader Sentiment - USD/JPY Price Chart - Dollar vs Yen Retail Positioning- Technical Outlook

  • A summary of IG Client Sentiment shows traders are net-long USD/JPY – the ratio stands at +1.15 (53.38% of traders are long) – neutral reading
  • Long positions are3.17% lower than yesterday and 11.00% higher from last week
  • Short positions are 3.72% lower than yesterday and 0.12% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/JPY-bearish contrarian trading bias from a sentiment standpoint.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily -9% -2% -6%
Weekly 4% 24% 13%

Key US / Japan Data Releases

Key US / Japan Data Releases  - USD/JPY Economic Calendar - Event Risk Ahead

Economic Calendarlatest economic developments and upcoming event risk.

Previous Weekly Technical Charts

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— Written by Michael Boutros, Technical Currency Strategist with Finance Prop

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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