Yen Reversal in Play as Traders Remain Net-Long

USDJPY: Retail trader data shows 55.5% of traders are net-long with the ratio of traders long to short at 1.25 to 1. In fact, traders have remained net-long since Nov 15 when USDJPY traded near 113.603; price has moved 0.8% lower since then. The number of traders net-long is 0.3% lower than yesterday and 29.9% lower from last week, while the number of traders net-short is 0.8% higher than yesterday and 13.6% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDJPY price trend may soon reverse higher despite the fact traders remain net-long.

--- Written by Dylan Jusino, DailyFX Research