Euro Finally Makes the Move We’ve Been Watching
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Trade Implications – EURUSD: In the past weeks we’ve noted that crowds had never been more short the Euro. We typically go against the herd; if everyone’s short we prefer to be long and vice versa. Yet history will likewise show that the crowd is often the most short at the top and long at the bottom.
The fact that we’ve seen a material shift towards short covering and crowd buying suggests that the recent record short position did indeed coincide with a price top. Indeed our purely sentiment-based Momentum2 system is now short from $1.3826, and our technical focus leaves us watching for further Euro weakness.
--- 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.