Forex Moves and Sentiment Confirm Major EURUSD Top
EURUSD – It’s been a slow process, but we think the Euro set a substantial top as forex crowd short positions hit a record. The recent pullback in both price and retail forex sentiment confirms the turnaround.
Trade Implications – EURUSD: As we wrote last week, we typically look to our Speculative Sentiment Index data as a contrarian indicator to price action. Or in plain English: if everyone’s selling, we most often look to buy.
Yet our sentiment-based Momentum2 trading system recently went short EUR from $1.3270 as we’ve seen an aggressive shift in positions. The total number of retail long positions has surged 28 percent in the past week, while short orders have fallen 11 percent. We like trading the EURUSD lower until further notice.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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