Receive the Weekly Speculative Sentiment Index report via PDF via David’s e-mail distribution list.
Trade Implications – EURUSD: We typically go against the crowd; if everyone has sold we prefer to buy. Yet retail traders are often their most short at important tops and their most long at significant lows. The caveat is clear: the sentiment and price extreme is only clear in hindsight.
The fact that these extremes are happening as the pair reverses off of important technical resistance nonetheless suggests that the EURUSD may soon reverse lower. A larger shift towards crowd buying would help confirm the EUR top; our sentiment-based Momentum2 strategy may soon sell if the pair does indeed turn lower.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
Automate our SSI-based trading strategies via Mirror Trader free of charge
To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.
Contact David via
Twitter at http://www.twitter.com/DRodriguezFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.