Euro Surge Looks Promising as Forex Positions at Record
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EURUSD – Retail forex traders are their most short the Euro versus the US Dollar on record, warning of a potential sentiment extreme and turning point for the high-flying currency.
Trade Implications – EURUSD: The fact that crowds continue selling into Euro strength suggests the EURUSD may continue higher. Yet the chart above will show that traders are often their most short at the top; how do we trade?
Two of our sentiment-based trading models are now long Euro from $1.3811 and $1.3745 as the pair trades to multi-year peaks. Those positions may work well if the pair continues higher. Yet our Senior Strategist emphasizes that we will need to see a EURUSD daily close above the critical $1.3800 level to confirm the new move. Continued failure at this level would negate our bullish forecast and favor a major USD reversal.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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