USD/JPY: Downward Trend in Weekly Short Positions Leads to a Bearish Bias


53% of Retail Traders are Net-Short

USDJPY: Retail trader data shows 46.7% of traders are net-long with the ratio of traders short to long at 1.14 to 1. In fact, traders have remained net-short since Nov 02 when USDJPY traded near 112.854; price has moved 0.2% lower since then. The percentage of traders net-long is now its highest since Nov 06 when USDJPY traded near 113.341. The number of traders net-long is 6.2% higher than yesterday and 25.7% higher from last week, while the number of traders net-short is 10.2% lower than yesterday and 27.3% lower from last week.

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Further Less Net-Short Positions Suggest a Bearish Bias

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

— Written by Fan Xu,

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