German DAX Could Have Set Important Top
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German DAX– Retail traders have bought aggressively into recent GER30 declines, and a contrarian view of crowd sentiment warns the German DAX may fall further through near-term trading. Last week we admittedly noted the opposite—crowd selling pointed to DAX rallies until we saw a turn in sentiment. Yet the facts have changed, and we will change our trading bias accordingly.
Going against the crowd means that we may lose more often than we gain, and indeed this is what our real FX trader data shows. Viewed from a potential reward to risk perspective, however, the same data suggests we may do best over time in taking the opposite side of the trade.
See next currency section: S&P - S&P 500 Shows Signs of Exhaustion, but it Remains a Buy
--- 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.