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Positioning Shifts Warn of Potential Move Lower in AUD/USD

Positioning Shifts Warn of Potential Move Lower in AUD/USD

Christopher Vecchio, CFA, Senior Strategist

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

AUDUSD: Retail trader data shows 41.8% of traders are net-long with the ratio of traders short to long at 1.39 to 1. In fact, traders have remained net-short since Jun 04 when AUDUSD traded near 0.74145; price has moved 6.2% higher since then. The percentage of traders net-long is now its highest since Aug 28 when AUDUSD traded near 0.79162. The number of traders net-long is 38.3% higher than yesterday and 21.2% higher from last week, while the number of traders net-short is 12.3% lower than yesterday and 17.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUDUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current AUDUSD price trend may soon reverse lower despite the fact traders remain net-short.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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