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Trading Crowds Go in One Direction - Our Systems Gain Doing Opposite

Trading Crowds Go in One Direction - Our Systems Gain Doing Opposite

2013-04-11 16:00:00
David Rodriguez, Head of Product
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Our sentiment-based strategies have had a great week trading the Japanese Yen meltdown, and retail forex crowd extremes offer a number of attractive trades in Yen and US Dollar pairs.

View individual currency sections:

EURUSD - We’re Buying Euro as Crowds Go in Opposite Direction

GBPUSD - British Pound’s Break Higher Shows Promise, We Like Buying

EURJPY - Japanese Yen Meltdown Produces Banner Week for Trading Strategies

XAUUSD - Gold Prices are Tanking - Not a Time to Catch Falling Knives

SPX500 - Selling SPX500 Akin to Jumping in Front of Freight Train

AUDUSD - Australian Dollar Finally Cooperates - Longs Look Good Here

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

ssi_table_story_body_Picture_18.png, Trading Crowds Go in One Direction - Our Systems Gain Doing Opposite

It’s been an impressive week of trading for our purely sentiment-based Momentum2 and volatility-friendly Breakout2 trading strategies, as extreme Japanese Yen moves following the Bank of Japan interest rate decision left them plainly positioned for further losses.

Past performance is absolutely not indicative of future results, but the fact that trading crowds have continued buying into Japanese Yen and US Dollar weakness suggest this move is far from over. Indeed, Euro and British Pound short positions against the USD surged an almost-unbelievable 82 and 158 percent since last week. We would be very careful about joining the crowd at these levels—in fact we like doing the opposite.

Elevated volatility expectations in JPY pairs makes the Breakout2 strategy particularly attractive on the EURJPY, while outperformance in our streak-prone Momentum2 suggests its USD and JPY-shorts may continue to do well in the days ahead.

Download eight years’ worth of SSI data via this link.

ssi_table_story_body_1a.png, Trading Crowds Go in One Direction - Our Systems Gain Doing Opposite

Download all of our Sentiment-based trading strategies free via an ongoing promo on FXCMApps.com

View how to automate the high-volatility Breakout2 Trading System via our previous article and webinar recording.

Auto trade the trend reversal-trading Momentum2system via our previous article and webinar recording.

Trade with strong trends via our Momentum1 Trading System and view an archived webinar

Use our counter-trend Range2 Trading system and view an archived webinar guide on automation

ssi_table_story_body_Picture_19.png, Trading Crowds Go in One Direction - Our Systems Gain Doing Opposite

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

Download all of our Sentiment-based trading strategies free via an ongoing promo on FXCMApps.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.

New to FX markets? Learn more in our video trading guide.

Contact David via

Twitter at http://www.twitter.com/DRodriguezFX

Facebook at http://www.Facebook.com/DRodriguezFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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