Retail forex trading crowds are extremely net-long the US Dollar (ticker: USDOLLAR) against the Japanese Yen, and the ratio of traders long per short stands at a whopping 10.8 to 1. Indeed, retail positioning is at its most one-sided USDJPY since the pair traded near record-lows in February, and we believe there is clear evidence in favor of a significant Japanese Yen top.
Catching bottoms is always extremely risky, and we’ll need to see some sort of confirmation before we get into a long position. Indeed, we may wait for our sentiment-based “Tidal Shift” strategy to take a long position before considering an entry. In the meantime, such extremely one-sided retail trader sentiment leaves us unwilling to join the crowd of USDJPY longs.
