This text is from blog famous currency strategist Joel Kruger .MONTH-END/QUARTER END – Although I continue to highlight my strong broad based US Dollar bullish bias, I have also warned over the past few sessions that the path to additional US Dollar gains could be bumpy. We have already seen some decent USD sales on Friday and the buck could suffer from additional setbacks on Friday. But any declines should be very well supported over the coming sessions and the Greenback should once again regain its footing. Also a note of caution that Friday could be a bit crazy with month-end and quarter-end flows factoring into the equation.
See forex technical analysis from Joel Kruger – see video :
SIMPLY AMAZING! – Moving on, I have rarely seen a retail positioning ratio so overwhelmingly weighted to one side as the ratio currently showing in USD/JPY. Retail traders are long the major pair at about 20:1! This is nothing short of astounding when considering the fact that most ratio extremes are usually well below 5:1. So what does this mean? Well…generally the direction of retail is not the direction a trader wishing to make money should be taking. But at the same time, when a ratio gets to be so weighted to one side as it currently shows, it is often a red flag for imminent and major reversal.
RETAIL LIQUIDATION INDICATOR – How this plays out exactly remains in question. We could see one more sharp drop in USD/JPY towards and potentially below 77.00, which wipes out the retail longs and normalizes the ratio, eventually leading to a higher USD/JPY rate….or, we could see the pair start to break higher ahead of 77.00, with weaker longs looking to exit the moment they see any profit or decide losses are manageable and they no longer have the stomach to sit on the position. Once this happens, the pair will almost certainly accelerate to the topside. At the end of the day, the question is not IF but WHEN USD/JPY breaks out to the topside. In my view, both the technicals and fundamentals are warning of a much higher USD/JPY rate.