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Forex pairs in this Article » EUR/USD
ssi_eur-usd_body_Picture_12.png, Euro at Important Danger of DeclinesReceive the Weekly Speculative Sentiment Index report via PDF via David’s e-mail distribution list.

EURUSD – Retail forex traders remain exceedingly long the US Dollar across the board, and indeed the crowd remains near its most short EURUSD since the pair set an important top in December.

Trade Implications – EURUSD: We typically go against the crowd; if everyone has sold we prefer to buy. Yet retail traders are often their most short at important tops and their most long at significant lows. The caveat is clear: the sentiment and price extreme is only clear in hindsight.

The fact that these extremes are happening as the pair reverses off of important technical resistance nonetheless suggests that the EURUSD may soon reverse lower. A larger shift towards crowd buying would help confirm the EUR top; our sentiment-based Momentum2 strategy may soon sell if the pair does indeed turn lower.

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