Japanese Yen Short-Term Technical Outlook: USD/JPY Free-Falling

Japanese Yen Technical Outlook: USD/JPY Short-term Trade Levels

• Japanese Yen attempting fifth consecutive daily advance (first time since December)
• USD/JPY plunge now approaching major support confluence- risk for price inflection
• Resistance 140.10s, 140.93, 142.10/50 (key)- support 137.36/91, 136.15, 134.04

The Japanese Yen has continued to coil just below uptrend resistance with major event risk on tap into the close of the week. The focus is on a breakout of the monthly opening-range for guidance. These are the updated targets and invalidation levels that matter on the USD/JPY short-term technical charts.

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Japanese Yen Price Chart – USD/JPY Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Technical Outlook: In last month’s Japanese Yen Short-term Outlook we noted that USD/JPY was, “in consolidation just below uptrend resistance- looking for a breakout of the June opening-range in the days ahead. From a trading standpoint, losses should be limited by 137.28 IF price is heading higher on this stretch with a close above 140.33 needed to mark resumption of the broader uptrend.”

A breakout three-days later fueled a rally of nearly 4.8% off the June lows with price turning from confluent resistance at the September opening-range highs around 145. USD/JPY has now plunged more than 4.4% off the highs with the bears poised for a fifth daily decline- initial support objectives now in view.

Japanese Yen Price Chart – USD/JPY 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Notes: A closer look at Yen price action shows USD/JPY in a one-way directional plunge since the start of the week with price now approaching the first major support hurdle here at 137.16/91- a region define by the 200-day moving average and the March high-day close / swing high. A break / daily close below this threshold is needed to keep the immediate downside bias viable in the days ahead. Subsequent support objectives eyed at 136.15 with broader bullish invalidation raised to the 61.8% Fibonacci retracement of the yearly range at 134.04.

Initial resistance now eyed at the 75% parallel (blue slope currently ~140.10s) backed by the objective May high at 140.93. Ultimately, a breach / close above the weekly open / 61.8% retracement of the 2022 decline at 142.10/50 would be needed to mark resumption of the broader USD/JPY uptrend.

Bottom line: The USD/JPY plunge us approaching the first major technical support hurdle just below the 138-handle. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards this key support zone – rallies should be limited to the weekly open IF price is heading lower on this stretch. I’ll publish an updated Japanese Yen Weekly Forecast once we get further clarity on the longer-term USD/JPY technical trade levels.  

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex