Taking this into account, the USDJPY has broken higher above the 113.20 level squeezing JPY longs (USDJPY shorts) out of their positions. It’s been a great run as of late, but if you look a little longer term, the 114.00/40 level should offer some stiff resistance as this is a lot of horizontal resistance spawning back to the spike highs through the summer of 2017. The DSI (Daily Sentiment Index) reading is also at a staggering 10 showing extreme bearish sentiment of the JPY which can be looked as a possible contrarian indicator in the coming sessions.
In addition, the COT (commitment of Traders) report from Friday is showing speculators fairly short the JPY as well which is also a potential contrarian indicator headed into next week.
What I will be watching is equities and bonds. If bonds continue to rise and equities break lower through the ascending wedge support I may start hunting JPY longs (XXXJPY shorts) as I think some of the weak hands were squeezed through the move through 113.20 and could show a reversal next week at some point.
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