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USD/JPY Analysis

Current positioning:

• 49.50% of traders are net-long
• The ratio of short to long traders is 1.02 to 1, indicating a slight bias towards short positions

Changes in positioning:

• Net-long traders increased by 2.61% since yesterday and 11.55% from last week
• Net-short traders increased by 0.95% since yesterday but decreased by 4.75% from last week

Contrarian view:

The analysis suggests taking a contrarian view to crowd sentiment. Since traders are net-short (though only slightly), this typically implies that USD/JPY prices may continue to rise.

Warning of potential trend reversal:

Despite the overall net-short position, traders are becoming less net-short compared to yesterday and last week. This change in sentiment suggests that the current upward price trend in USD/JPY may soon reverse lower.

The conclusion drawn from this data is somewhat mixed. While the contrarian view would suggest further price increases, the recent shifts in positioning (becoming less net-short) warn of a potential downward reversal. This highlights the importance of considering both overall positioning and recent changes when analysing market sentiment.

AUD/USD Analysis

Current positioning:

• 39.72% of traders are net-long
• The ratio of short to long traders is 1.52 to 1, indicating a stronger bias towards short positions

Changes in positioning:

• Net-long traders increased by 7.49% since yesterday but decreased by 13.60% from last week
• Net-short traders increased by 4.44% since yesterday and 12.43% from last week

Contrarian view:

The analysis again suggests taking a contrarian view to crowd sentiment. Since traders are more significantly net-short on AUD/USD, this typically implies that AUD/USD prices may continue to rise.

Mixed trading bias:

The positioning is less net-short than yesterday (due to the larger percentage increase in net-long positions), but more net-short compared to last week. This combination of current sentiment and recent changes results in a mixed trading bias for AUD/USD.

Key observations:

• There's a stronger short bias for AUD/USD compared to the previous USD/JPY data.
• Short-term (daily) and medium-term (weekly) changes are moving in opposite directions for long positions, adding to the mixed outlook.
• Since yesterday, The increase in net-long and net-short positions suggests growing interest or volatility in this pair.

The conclusion here is less clear-cut than the previous example. While the contrarian view still suggests potential price increases due to the overall net-short position, the mixed signals from recent changes make it difficult to form a strong directional bias.

Source https://www.dailyfx.com/analysis/usd-jpy-and-aud-usd-latest-sentiment-analysis-and-positioning-20240827.html