Positioning Shifts Warn of Potential Move Lower in AUD/USD
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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
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