USDJPY: Diminishing Selling Pressure Points to Short-Term Reversal

Something interesting is happening on USDJPY sentiment. Two selling waves, but the second one is telling a very different story.

📊 What The Sentiment Shows:

Looking at the USDJPY Long/Short sentiment chart over the past 5 days, two distinct selling phases stand out:

Wave 1 (Feb 10–11): The Big Push

• Retail buy sentiment surged — traders piled into longs
• Despite the bullish crowd, price dropped significantly
• Classic retail trap: the majority bought, the market sold

Wave 2 (Feb 12–13): The Weak Follow-Through

• Buy sentiment rose again — retail traders still leaning long
• Price dropped again, but this time failed to break the Wave 1 low
• Same bullish retail positioning, but less downside follow-through
• Selling momentum is fading despite persistent retail long bias

🎯 Why This Matters:

In both waves, retail traders positioned long — yet price fell. But here's the key: in Wave 2, the same bullish retail positioning produced a smaller decline that couldn't break the previous low. This is a sign that:

• The selling force behind the counter-retail move is weakening
• Buyers (likely institutional) are absorbing selling pressure at these levels
• The market may be running out of room to punish retail longs

⚡ Short-Term Outlook:

This pattern suggests a potential short-term buy opportunity on USDJPY. The diminishing selling waves indicate that bears are running out of momentum, and a relief bounce is likely.

Key levels to watch: If the previous low holds and sentiment starts flipping back toward long, that confirms the exhaustion thesis. A break below the prior low invalidates this setup.

Not financial advice — sentiment is one piece of the puzzle.