New Zealand Dollar Remains a Sell Until this Changes
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NZDUSD– A shift in retail FX trader positions warns that the New Zealand Dollar may trade onto fresh lows versus the US Dollar. And indeed, our data shows the majority of open positions in our sample are long the NZD/USD—the opposite of last week when most were short. We most often use retail ‘crowd’ sentiment as a contrarian indicator to price action, and if most are long we typically look to sell.
The clear caveat is that retail traders tend to do well in slow-moving markets, and it’s possible the New Zealand Dollar will bounce off of near-term support. A failure to break below $0.6600 would give us clear pause in our calls for NZD/USD declines.
See next currency section: XAUUSD - Gold Forecast Changes Once Again – Third time a Charm?
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.