USD/JPY, CAD/JPY, GBP/JPY Key Levels

Japanese Yen, JPY Index, USD/JPY, CAD/JPY, GBP/JPY – Talking Points:

The Japanese Yen’s recent rebound higher against could be running out of steam.
USD/JPY eyeing retest of monthly low after failing to breach key resistance.
CAD/JPY Ascending Triangle pattern hints at further upside.
Head and Shoulders pattern could inspire GBP/JPY sellers.

As mentioned in previous reports, the Japanese Yen’s 5% rally from the yearly low set on September 1 may prove to be a mere counter-trend correction, as the sentiment-defining 200-day moving average stifles the haven-associated currency’s surge against its major counterparts.

JPY Index** Daily Chart – 100-DMA Guiding Price Lower

JPY Index daily chart created using TradingView

**JPY Index averages CAD/JPY, GBP/JPY, EUR/JPY, AUD/JPY

The path of least resistance for the Japanese Yen appears to be lower, as price crashes back below the 2014 uptrend and the RSI drifts below its neutral midpoint.

Moreover, with JPY travelling within the confines of a bearish Descending Channel and the MACD indicator eyeing a push into negative territory, an extension of the retreat from the September high looks in the offing.

A daily close below the trend-defining 50-DMA and July low would probably signal a resumption of the primary downtrend and precipitate a push to retest the yearly low.

However, if the 50-DMA remains intact and RSI climbs back towards overbought territory, an extended rebound to test the 21-DMA and Descending Channel downtrend is hardly out of the question.

USD/JPY Daily Chart – May Low Capping Upside

USD/JPY daily chart created using TradingView

USD/JPY rates look to be at risk of reversing lower in the near-term, as buyers fail to breach key resistance at the May low (105.99) and price slides back below all four moving averages.

An extended downside push looks likely given USD/JPY continues to track within a Descending Schiff Pitchfork and the RSI is travelling firmly below its neutral midpoint.

With that in mind, a daily close below the psychologically imposing 105.00 mark is needed to validate bearish potential and carve a path for price to test confluent support at the Schiff Pitchfork median and September low (104.00).

Conversely, a close above the 21-DMA (105.54) could encourage would-be buyers and generate a push to retest the monthly high (106.11) and 100-DMA (106.28).

of clients are net long.

of clients are net short.

Change in	Longs	Shorts	OI
Daily	-6%	-6%	-6%
Weekly	4%	-24%	-10%

CAD/JPY Daily Chart – Ascending Triangle in Play?

CAD/JPY daily chart created using TradingView

The CAD/JPY exchange rate appears to be eyeing a push to retest the August high (81.58), after slicing through all four moving averages and bursting above key resistance at the July high (80.14).

In fact, price appears to be carving out a bullish Ascending Triangle formation which suggests that an extended topside push may be on the cards, if CAD/JPY is able to remain constructively positioned above the psychologically pivotal 80.00 mark and sentiment-defining 200-DMA (79.74).

A daily close above the monthly high (80.60) is needed to validate bullish potential and open a path towards the August high (81.58).

On the other hand, a break below 80.00 would probably ignite a more extended pullback and could bring confluent support at the Ascending Triangle hypotenuse and the October 7 swing-low (79.19) into focus.

GBP/JPY Daily Chart – Carving Out Head and Shoulders Top

GBP/JPY daily chart created using TradingView

Finally, the path of least resistance for GBP/JPY rates seems skewed to the downside, as price carves out a bearish Head and Shoulders reversal pattern and buyers fail to hurdle resistance at the August low (137.75).

A bearish crossover on the MACD indicator, in tandem with the RSI sliding back below 50, could inspire would-be sellers and ultimately lead to an extension of the exchange rate’s retreat from the September high (142.71), if support at the 136.00 mark gives way.

With that in mind, a daily close below the October 7 swing-low (135.87) would probably facilitate an extended downside push to test the neckline of the bearish reversal pattern, with a break below the 78.6% Fibonacci (133.75) needed to bring the May low (129.30) into play.

of clients are net long.

of clients are net short.