FOREX ANALYSIS: Australian Dollar Forecast to Turn Lower
AUDUSD – Retail forex trading crowds have scaled back their US Dollar (ticker: USDOLLAR) long positions versus the Australian Dollar, and the noteworthy shift in crowd sentiment warns that the AUDUSD may have set a short-term top. Last week we wrote that extremely one-sided positions warned that a turnaround may be near—particularly as large speculators were their most net-long AUDUSD in history.
At the time, however, we warned that sentiment extremes and turning points are only clear in hindsight and awaited clearer sign of potential reversal. In the meantime we’ve seen a key technical turnaround and one of our sentiment-based trading strategies has sold AUDUSD from $1.0546. Betting on major reversals is always risky, but we see early evidence that the Australian Dollar may have set a noteworthy top.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.