Japanese Yen at Critical Resistance, Outlook Bullish
Retail forex speculators remain heavily net-long the US Dollar (ticker: USDOLLAR) against the Japanese Yen, underlining the strength of the broader USDJPY downtrend. Yet the SSI has shown crowds first turned net-long USDJPY as the pair crossed below ¥90 in late 2010. Such one-sided crowd sentiment arguably makes shifts in trader positioning more significant than the positioning itself.
Since last week the number of traders long has grown by an impressive 38 percent, while shorts have fallen by a similarly significant 32 percent. The sharp build in long positions warns that the USDJPY may press to fresh lows. It remains critical to watch key technical trend channel price support at ¥79, however; a hold above would negate our bearish sentiment-based bias.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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