Forex Analysis: Crowds Extremely Long US Dollar, May Continue Lower
Retail forex trading crowds have bought aggressively into US Dollar (ticker: USDOLLAR) weakness against the Euro and broader counterparts. We’ll take a contrarian view in favor of further USD declines.
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The significant shift in trader sentiment has been enough to force our sentiment-based forex trading strategies to sell the US Dollar across the board. Yet this is with the important caveat that retail crowds are often most net-long at the bottom of the market.
We’ll keep a close eye on whether the USDOLLAR is able to trade above psychologically significant resistance at the 10000 mark. If we do indeed see a USD breakout, it might serve as short-term confirmation of an important reversal.
--- 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.