Trading opportunities on the currency pair: Large and small speculators are both keeping open positions against the yen. According to cyclical analysis, the dollar’s phase of strengthening will come to an end between the 8th and 23rd of November somewhere between 115.40 and 116.07. I reckon that buyers won’t be able to break through the resistance zone (114.60 – 115.00) on the first attempt and a new rally will start from 112.45 – 113.35, which will continue until the end of the year. The main target is 119.24, while the most immediate target is 116.60. The case for growth will disappear if the daily candlestick closes below 112.50.

Background

The last idea on the USDJPY pair came out on the Sept. 11, 2017. At the time of publication, the dollar was trading at 107.84 JPY. On the 8th of September, before the weekend, the dollar dropped below the C-C channel and the 61.8% Fibonacci level of the upwards movement from 101.19 to 118.66. Given that the channel had been broken though, I was expecting the dollar to drop further. On Monday the 11th of September, the dollar closed up against the yen at 109.39 (+155 pips). The breakout of the channel turned out to be false. By the end of the day, the situation had reversed.

Current situation

On Friday the 3rd of November, the CFTC released a new weekly COT report, showing a summary of open positions by traders from 24/10/17 to 31/10/17 inclusive.

Large speculators (Non-commercial): Last week, this group reduced both their short and long positions (long ones by more). Long positions fell by 4,042 to 50,784 contracts, while short positions fell by 2,645 to 171,209 contracts. Net short positions increased by 1,397 to reach 120,425 contracts.

Small speculators (Non-reportable positions): This group also reduced their positions on the yen. Long positions fell by 948 to 18,572 contracts, while short positions fell by 1,515 to 47,935 contracts. Net short positions fell by 567 to 29,363 contracts.