USDJPY – Forex trading crowds are their least net-long the US Dollar against the Japanese Yen since the pair last traded to ¥85, and the tide has clearly turned in favor of further USDJPY strength. The fact that the pair now trades comfortably above ¥80 suggests that this break is the “real deal”, and we favor further USDJPY gains through the short and medium term.
Our SSI ratio stands at 1.51 as there are 1.51 traders long for every one short. This is a substantial shift from several weeks ago when the same ratio stood at a substantial 17.5 to 1. Since last week alone, long interest fell 8% while shorts surged 62%.
Last week we wrote that the ¥80 mark was the “line in the sand” and the real test on whether this would be a lasting recovery. We can’t rule out short-term pullbacks, but there is little major price resistance until April, 2011 highs of ¥85.40.
How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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