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USDJPY –Forex trading crowds recently hit their most long the Dollar versus the Japanese Yen since it bottomed in October. A contrarian view of retail sentiment keeps our short-term focus lower.
Trade Implications – JPY Pairs: Trader sentiment is often at its most extreme at major tops and bottoms, and the fact that the crowd is so heavily long warns that we may be near an important turning point in the USDJPY. Yet there are only so many times the pair can continue to hold key 200-day SMA and price congestion support.
Our Senior Strategist sees evidence that a daily USDJPY close below ¥101.35 could spark a more meaningful breakdown.
See next currency section:AUDUSD - Australian Dollar Forecast Favors Continued Weakness
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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