Forex Analysis: Retail Traders Heavily Long USD, Reversal Risk Grows
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Our sentiment-based forex trading strategies continue to sell the US Dollar and Japanese Yen across the board, and our overall outlook for market conditions likewise favors trading USD and JPY weakness.
It is important to note that sentiment is quite often at its most one-sided at important market tops and bottoms, and there is clear risk of a US Dollar reversal—particularly against the high-flying Australian Dollar. Yet tops and bottoms are only clear in hindsight, and current retail sentiment readings warn against buying USD and JPY weakness.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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