Euro May have Set Significant Top
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EURUSD – Retail traders had recently become their most short Euro on record, and we have consistently remained in favor of further rallies. Yet a significant shift warns that the EURUSD continues lower.
Trade Implications – EURUSD: Retail short interest in the Euro has fallen a significant 25 percent since last week, while long interest is up 30 percent. Timing major market reversals is very difficult, but the sharp shift has led our sentiment-based Momentum2 to sell the Euro from $1.3737.
It’s important to note that the vast majority of traders remain short—usually enough to keep us bullish. Yet our Senior Market Strategist notes that an aggressive EURUSD decline below $1.3655 may warn of a bigger correction.
--- 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.