Wow. It seems as though traders are nearing a flip in positioning on the USDJPY, which would definitely be a bullish sign for the currency. Count me among the traders who will look to buy USDJPY on a confirmed flip to net-short on the SSI.

57% of retail traders are long USDJPY (long to short ratio is 1.30). However, since last week, retail has been selling the USDJPY (short positions are up by 23.9%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a MEDIUM SIGNAL TO SELL USDJPY.

Carry Trade

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I'm actually long USDJPY since it broke 117.00 and pulled back to test that level. However, price action has been very disappointing from the 'break' on. The pullback down to 116.80 seems to have eroded some of the importance of 117 and there is no momentum suggesting bulls are jumping on board for the technical move; and if that doesn't happen within 24 hours after the actual break, it probably won't happen at all.

Now we are drifting, waiting for some event risk to take us higher. This is somewhat dangerous for existing longs IMO. I'm debating whether or not to just cut the position since the techs alone couldn't provide. For now, I'm just going to move up stops and let my target just above 118 stand. Very interesting that the equity rally yesterday didn't drive USDJPY higher, especially with expectations of an October Fed cut dropping.

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56% of retail traders are long USDJPY (long to short ratio is 1.27). However, since last week, retail has been selling the USDJPY (short positions are up by 26.4%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a MEDIUM SIGNAL TO SELL USDJPY.


Source: FXCM Dealing Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...507524032.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

The follow-through is definitely a bit underwhelming. I still think that your target is a good one, though, and am confident that the trade will pan out. Recent price action seems to be consistent with consolidation before continuations in trend.

Looks like there is a wide field of congestion above our recent highs (117.60 - 119.80). It looks like price action is starting to treat the bottom of this band as a source of resistance, but typically a congestion zone's impact is typically as a buffer for spot so that it will rise into the zone lose momentum and find resistance somewhere in the middle of the area.

Of course, most of the resent price action can be blamed on a lack of movement on the risk appetite/aversion front. Most of the carry trades have been 'relatively' stable and it seems traders are waiting for confirmation on at least a medium term direction. Equities are starting to concern me though. Always the pessimist, I always grow doubtful when benchmarks are making new highs. Especially with input costs rising and global growth slowing.

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USDJPY - The ratio of long to short positions in the USDJPY stands at 1.38 as nearly 58% of traders are long. Yesterday, the ratio was at 1.29 as 56% of open positions were long. In detail, long positions are 3.6% lower than yesterday and 26.9% weaker since last week. Short positions are 9.9% lower than yesterday and 43.2% stronger since last week. Open interest is 6.4% weaker than yesterday and 8.4% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.


Source: FXCM Dealing Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...507524032.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

The USDJPY is showing some signs that worry me a bit. The pair reversed sharply at the 50.0 percent fib of 124.10-111.53 at 117.80.

From a more "fundamental" standpoint, implied vols continue to support the pair. Shrinking implied volatility across the spectrum has really boosted the Yen, and further moderations in risk aversion can only continue to boost JPY crosses.

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It looks like USDJPY is going for another test of 117.85, and a break above 118.00 could target a cluster of resistance levels near 119.00 (the 100SMA, 200SMA, and the 61.8% fib of 124.10-111.53). If we see a strong performance in the equity markets today, I think 118.00 can be broken.

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The ratio of long to short positions in the USDJPY stands at 1.25 as nearly 56% of traders are long. Yesterday, the ratio was at 1.29 as 56% of open positions were long. In detail, long positions are 7.2% lower than yesterday and 29.6% weaker since last week. Short positions are 4.7% lower than yesterday and 51.5% stronger since last week. Open interest is 6.1% weaker than yesterday and 8.7% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.



Source: FXCM Dealing Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/strateg...903946044.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

File this under the "miscellaneous" section:

The USDJPY seems to be easing its correlation with the S&P 500. Could this be because risk aversion is easing across global financial markets? This is one of those instances that "I don't know what to make of this", so any and all opinions are welcome.

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It's getting really tiresome holding onto this position. The wedge USDJPY has been building is forming at a very slow clip. It looks like the rising trend and 117.85/118.00 resistance zone will be involved in a slow motion crash.

I'll hold onto my long position since it's in the money, but I'm going to move up the stop. If we get another drop back to 117.00, there may be momentum for follow through and a serious breakdown. Alternatively, if it is stalls at 117, we will have a range that we can play back and forth for 50-75 points each way and I wouldn't want to be hold a pure long USDJPY exposure.

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This could be interesting for the yen and all those pairs and assets affected by risk flows in the past few months. A few major central banks are putting together a fund ($80 bln) that would absorb a lot of the short-term debt out there and effectively make a market where there wasn't one before. I have read about this in a few different places, but FT.com seems to have done it best.

This is smart from their perspective. All the big banks were at risk of taking massive losses (a lot worse than what has already been recorded) from further mark downs in asset backed securities. Eventually, they would want to move the short-term debt off their balance sheets - or eventually they would have to roll it out come expiry - and that would be a tremendous red mark (I suspect even a few smaller banks would be tanked by it). However, under this plan, every one can successfully roll out their short-term debt obligations (or if they are at all smart and learn from their mistakes, hedge their long-term liabilities with a maturity that would more closely match it). At the same time, Citi and BoA will collect fees for this service.

Could this fund be a new risk gauge? Let's see if credit default swaps and all the multi-tiered derivatives out there are immediately bid up with this market save or if the overleveraged institutional specs have learned their lesson.

I don't think anyone in the trenches is overly impressed with the move. They were planning on setting up these type of funds on their own, and the fact that they're cooperating is more symbolic than anything.