Growing USDJPY Shorts And Open Interest Build For Breakout

USD/JPY Ratio: -1.18
Signal: Bullish

USDJPY – The pressure behind a USDJPY break out above stubborn resistance at 105.50 has grown over the past week. Technically, the pair recovered from a test of major trend channel support this past week and returned right back to its two-and-a-half month highs. With this rebound in the underlying, speculative positioning has fought the trend as traders bet that the pair’s broad range will hold. The USDJPY Speculative Sentiment Index ratio stands at -1.18 with nearly 54% of retail traders holding short position. And, while this is a modest reading, it is still on par with the most extreme negative readings in the past 10 months. Furthermore, the report’s breakdown suggests there is considerable trading activity among traders - often a sign that a major market shift is imminent. Since yesterday, long trades jumped 10.8% though bullish positioning is only 1.4% stronger than last week. Shorts on the other hand were 7.3% weaker than yesterday but a considerable 23.9% higher than a week ago. Altogether, open interest rose 14.6% over the week and is 16.4% above the monthly average. As a contrarian indicator, the SSI points to an eventually upside breakout from USDJPY.