Awful title, I know, but looking at the USDJPY charts I can’t get that song out of my head!
I said in my last post that I thought the top may be in on the soar-away Yen and the evidence for a reversal is mounting. At the time, all we really had was price being resisted at a previous support level, overextension from the EMA’s and a weak reversal divergence on the Daily chart.
All of that is still true, but now we also have a possible double top on the 4hr chart (at the MR1 level) and a series of reversal divergences on the 60.
Added to this, I noticed that the Daily FX SSI indicator shows there are fewer retail short positions now than at the beginning of the week on the Yen. For those not familiar with SSI, it measures how the difference between long and short positions held by the broker FXCM. The way you read it is to look at what the majority of retail traders are doing (in this case, going long USDJPY), and you do the opposite – because most retail traders are wrong most of the time!
It all adds up to a compelling case for going short.