FX:USDJPY   U.S. Dollar / Japanese Yen
USD/JPY: Retail trader data shows 26.08% of traders are net-long with the ratio of traders short to long at 2.83 to 1. The number of traders net-long is 1.43% higher than yesterday and 19.25% lower from last week, while the number of traders net-short is 2.78% higher than yesterday and 27.31% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/JPY-bearish contrarian trading bias.

Even as the DXY Index’s rally has paused, USD/JPY rates have continued to surge higher. Looking at USD/JPY from the weekly timeframe , there is a reasonable basis to believe that we’re still in the early innings of a longer-term bullish breakout. USD/JPY rates are above their weekly 4-, 8-, and 13-EMA envelope , which is in bullish sequential order. Weekly MACD has just issued a bullish crossover while above its signal line, and weekly Slow Stochastics have started to return to overbought territory.

Near-term resistance may soon be approaching in the form of the 23.6% Fibonacci retracement of the 2011 low/2015 high range at 114.200, but any pullback from this level henceforth would necessarily be viewed as a ‘buy the dip’ opportunity – especially as US equity markets have started to breakout higher.