Talking Points on the Japanese Yen, USD/JPY, GBP/JPY, Technical Analysis, and Retail Trader Positioning Retail traders believe the Yen will continue to fall this year. In USD/JPY and GBP/JPY, upside exposure is gradually increasing. USD/JPY is aiming for a key trendline, while GBP/JPY is aiming for moving averages. Retail traders have been increasing their upside exposure in Japanese Yen pairs such as USD/JPY and GBP/JPY, according to IG Client Sentiment (IGCS). IGCS is a contrarian indicator, which means that if investors continue to build up long bets, this could be an indication that these pairings are about to become vulnerable. Check out the latest webinar recording of my IGCS presentation to discover more about how you may use this tool in your own trading approach. Bearish USD/JPY Sentiment Outlook According to the IGCS index, around 42% of retail traders are net long USD/JPY. On a daily and weekly basis, upside exposure has increased by 5.65 percent and 10.83 percent, respectively. The fact that investors are still net-short the pair suggests that prices may continue to rise. Recent shifts in attitude, on the other hand, suggest that the current downward trend may be about to turn. Analysis of the Technical Since the beginning of the year, the USD/JPY has been trading with a broad upside bias, propelled higher by strengthening support. The pair is rapidly reaching March 2020 highs, creating a major resistance zone between 111.29 and 111.71. Getting to this zone, however, necessitates a surge above the March 2021 high of 110.96. A breach below the trendline could signal that the strong upward bias is in jeopardy. The 100-day Simple Moving Average (SMA) would be exposed as well. Daily USD/JPY ChartChart created in Trading View Bearish Sentiment for the GBP/JPY According to the IGCS index, around 43% of retail traders are net long GBP/JPY. On a daily and weekly basis, upside exposure increased by 19.64 percent and 41.95 percent, respectively. Nonetheless, the fact that the majority of traders are net-short means that prices may rise further. Recent swings in sentiment, on the other hand, suggest that the GBP/JPY could reverse downward.
Advertisement
Analysis of the Technical
GBP/JPY is still trading lower after breaking through a bearish Rising Wedge chart pattern. The 50-day SMA may give way, exposing the market to the 100-day counterpart. Even if the latter is broken, rising support from last year could re-establish the major upside emphasis – see the chart below. A sliding trendline from the beginning of June appears to be guiding the pair lower in the short term. In the event of more losses, the 148.53 – 149.38 region appears to offer key support. GBP/JPY Daily Chart*IG Client Sentiment Charts and Positioning Data Used from June 30th Report—- Daniel Dubrovsky is a strategist for DailyFX.com. Use the comments area below to reach out to Daniel, or follow him on Twitter at @ddubrovskyFX.
DailyFX delivers forex news and technical analysis on the global currency markets’ current developments.
DISCLOSURES
Continue reading
