Japanese Yen Likely Topped on Sentiment Extreme
USDJPY - Crowds remain aggressively net-long the US Dollar against the Japanese Yen, and record positioning may actually warn that the USDJPY set a significant bottom through September trade. We most often use our retail trader-based Speculative Sentiment Index as a contrarian indicator to price action; if crowds are long, we prefer to be short.
Yet one-sided sentiment extremes quite often occur at tops and bottoms, and the fact that there were nearly 20 retail traders long USDJPY for every short served as fairly clear warning that a bottom may be in place.
Key price levels to watch for the USDJPY are support of ¥78 and resistance of ¥78.65.
--- 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;
New to FX markets? Learn more in our video trading guide.
Contact David via
Twitter at http://www.twitter.com/DRodriguezFX
Facebook at http://www.Facebook.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.