US Dollar Setting up for Major Reversal - Here's What Could Confirm
- Forex trading crowds remain aggressively long the Dollar across the board
- Sentiment extremes warn of potentially significant turnaround in price
- Reversals are only clear in hindsight, we’re watching these key factors before buying
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Weekly Summary of Forex Trader Sentiment and Changes in Positioning
The US Dollar trades at major lows across the board, and extremely one-sided retail forex sentiment warns of a potential extreme in both price and positioning. Or in other words: the USD could bottom near here.
The key term is “could”, and we need to protect against getting blindly long without concrete signs of reversal. Indeed we’ll be watching retail trader sentiment very closely for early signs of reversal.
Potential reward is significant on US Dollar long positions, but we’ll avoid taking outsized risk absent evidence of a major turnaround. See the above links for full currency-by-currency rundowns, and follow future updates on retail sentiment and our trading strategies via my e-mail distribution list.
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--- 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.