Yen continues to rally, breaking 2 important resistance 80.7 and 81.7 along the way (see chart below), looking to test the 2012 High of 84.15. Following the rally, Open Position Ratios has also dipped into Net Short for the first time since Mar, with current Net Short levels close to the higher Net Short levels of 12.6% back on Mar 12, just a few days before the peak on 15th.
As Open Position Ratio tend to be a contra-ion indicator, should current ratios flip back to Net Longs, and move deeper into the blue zone, we could potentially see USD/JPY not able to break above 84.15 and fall back to familiar levels below 80.0 eventually.
On the other hand, there remains a possibility of Net Shorts increasing, in this scenario, we could interpret it as a “breakout” in Net Short positions which will certainly improve the probability of USD/JPY pushing newer highs for 2012. However, that will require a strong shift in sentiment perhaps to the tune of Unlimited BOJ Intervention.
Historical Open Orders
Historical Open Orders suggest a short term push upward may not face strong resistance, with low concentration or perhaps no significant short orders hanging overhead. On the other hand, buy orders are all lining up where the previous short orders are potentially keeping USD/JPY afloat should price dip down on a short-term pullback.
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