Forex Analysis:Still Long USDJPY, Waiting for December
Yesterday's forex speculative sentiment index report highlighted the fact that retail traders remain extremely long the US Dollar. Indeed today an SSI snapshot shows ratios have actually grown further extreme on the EURUSD and GBPUSD.
The short-term trend seems fairly clear in favor of further USD weakness, and yet I don't see any good trading opportunities here because of the clearly elevated reversal risk on one-sided sentiment.
In fact technical forecasts for the USDOLLAR remain constructive, but I'll wait until the new month for the potential turnaround trade. Forex seasonality suggests that reversals are more likely at the beginning/end of the month, and I'll trade accordingly.
My only trade at the moment remains the USDJPY long position. I'm still willing to add at 81.60, and we got frustratingly close but didn't tag it. I won't chace price here either given the chance for important short-term pullback. My stop on the position remains below the 79 mark.
I'll keep my thoughts posted via the forex real time news feed.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.