The USD/JPY currency pair appears poised for a potential decline, as COT reports reveal a clear bias among large speculators favoring short positions. This bearish sentiment from institutional players starkly contrasts with the optimism displayed by retail traders, many of whom remain positioned long, anticipating a reversal.
However, retail sentiment often serves as fuel for liquidity hunts, with institutional strategies targeting stop-loss clusters near key support zones. Historical patterns suggest that when retail traders collectively lean too heavily in one direction, large speculators seize the opportunity to move the market against them.
With bearish positioning among speculators and retail sentiment ripe for exploitation, USD/JPY could face further downside pressure. Monitoring shifts in liquidity levels, sentiment extremes, and institutional positioning will be crucial in anticipating the next major move.
However, retail sentiment often serves as fuel for liquidity hunts, with institutional strategies targeting stop-loss clusters near key support zones. Historical patterns suggest that when retail traders collectively lean too heavily in one direction, large speculators seize the opportunity to move the market against them.
With bearish positioning among speculators and retail sentiment ripe for exploitation, USD/JPY could face further downside pressure. Monitoring shifts in liquidity levels, sentiment extremes, and institutional positioning will be crucial in anticipating the next major move.
Trade active
After analyzing the COT reports and retail sentiment, I adjusted all my weekly positions accordingly. Based on the analysis I shared this weekend, I initially considered 6-7 pairs but have now narrowed it down to 4. The other positions were either scaled out in profit or closed at break-even.Currently, I remain short on the following: USD/JPY, AUD/JPY, GBP/JPY, and AUD/CAD. I've scaled my positions and managed stops using ATR-based adjustments.
This is how trading works: new data means reassess and check if anything changes your thesis—not hope for the best.
Note
Nice add on the retest 1D zone. 
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.