Japanese Yen May have Topped versus Dollar
Retail FX trading crowds are near their most net-long the US Dollar (ticker: USDOLLAR) against the Japanese Yen since the pair set record-lows, and such one-sided sentiment warns that the USDJPY may have set an important floor at ¥77.90.
Two weeks ago we wrote that we saw high probability of a long-term USDJPY bottom, but timing a reversal remained extremely difficult amidst the clear-cut downtrend. Yet as we wrote in that same report, seasonal trends across FX markets show that currencies tend to produce lasting highs and lows at the beginning and end of each month.
The USDJPY set its most recent bottom exactly on August 1 at ¥77.90, and its seasonal significance adds further weight to the possibility that it could be the low. We would ideally see a larger swing in retail sentiment before growing more aggressively bullish, but early signs suggest that the Japanese Yen set an important top versus the US Dollar.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to email@example.com; Contact David via Twitter at http://www.twitter.com/DRodriguezFX
Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.