Stops at 101.20 and sub-101.00 probably still intact

The breadth indicator bullish percentage index is displaying the JPY as the strongest currency as of yesterday's close, the last time the index was updated. With a reading at 95% for three consecutive days, the index is saying the yen is bullish against 95% of a basket of 20 world currencies.



Let's now cross this data with the most recent numbers being published by the CFTC in the COT report and see what can we infer from this combination.

The latest data for the weekly Commitments of Traders (COT) report, released on Friday last week, showed that the ongoing bearish JPY position continues to be the broader theme but also that both long and short JPY positions were scaled back due to risk aversion up to the time of data being collected (8th April).




What can be inferred here is that the negative bias towards JPY could be further reduced in this week's CFTC report if the USD/JPY shows a direct loss of immediate support at 101.00/50. This was not the case during recent trading and the pair rallied today to clear the 102.00 handle. This means that all the stops from buyers located below 101.20 and sub-101.00 are still intact and pleading to be taken.
The directional clue we can get from a JPY BPI above 90% combined with a CoT report showing further trimming of the net short position in Japanese yen, is to play the short side of USDJPY. This has been a good position when risk sentiment is on and if signs of risk aversion persist, a breakdown would be sellable, initially targeting the 200 SMA on the daily chart.



Note: The Bullish Percentage Index compares four major currencies against 21 other traded currencies. It shows the percentage of currency crosses on buy signals on a Point and Figure chart. Point and figures charts are always unambiguously bullish or bearish, dictated by the most recent double-top buy signal. The BPI can used as an oscillator, as a means of trend confirmation or for divergence analysis.