USD/JPY Ratio: -1.80 Signal: Bullish
USDJPY – While other pair’s sentiment gauges have been heading towards more neutral readings this past week, positioning has actually grown more extreme for the USDJPY. Retail traders have held net short on the pair since the beginning of April – not long after the yen’s long-term advance was reversed. However, with a reading of -1.80 indicating nearly 64% of traders are short, we are looking at the most extreme short-side positioning for the pair since June of last year. Such a strong reading likely comes from spot’s proximity to a major, year-long falling trendline currently seen around 106.50. As a contrarian indicator, retailers’ efforts to fight the trend and profit from expected range conditions supports an eventual move to the upside. The breakdown of the USDJPY SSI report shows long positions have dropped 16.8% from yesterday, but are only 1.2% lower than last week’s levels. At the same time, shorts have jumped 24.5% in a day and are 6.6% stronger for the week. Net positioning has risen 7.2% over the week and is 1.2% above the monthly average.