Today has been the confirmation of a dramatic shift in Retail positioning in the USDJPY, for over a year retail traders have been net long USDJPY by over 70%! That’s a big number and at one stage this reached 90% Long as the currency was making all time lows. Of course throughout this time we maintained our overall short side bias.

However in the last few days we believe a DRAMATIC shift is taking place, a combination of sustained Japanese QE (which was once futile) and signs of a strengthening world economy (insert eye-roll), combined with a major reverse head and shoulders technical pattern, followed by strong shift in Retail positioning towards neutral territory (first time in over a year). Leads us to think that a bottom for the USDJPY is in play.