Euro Top Might be in Place, Here’s the Trade We’re Watching
EURUSD – The Euro made a fresh run at the highs and two weeks ago we highlighted that forex crowd short positions hit a record. The turnaround in price and positions suggests this could be an important turn.
Trade Implications – EURUSD: We usually use our proprietary retail positioning data as a contrarian indicator to price action; if everyone’s short, we typically look to buy. Crowds are currently short, but an important sign of reversal suggests a EURUSD top may be in place.
Our sentiment-based Momentum2 trading system recently closed a long position at roughly breakeven, and we’re looking for it to go short as confirmation for a major shift in price and sentiment.
--- 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.