Euro Breakdown Makes Next Dollar Move Critical
EURUSD – Forex trading crowds have remained heavily short the Euro against the US Dollar (ticker: USDOLLAR), but a recent build in crowd long positions gives us pause on our otherwise-bullish bias.
Trade Implications – EURUSD: Our purely sentiment-based Momentum2 strategy was stopped out of its previous EURUSD-long position at a respectable gain, and the system has since sold EURUSD from $1.3041 as retail traders bought aggressively into the sudden Euro breakdown. We’ve seen relatively little follow-through on the sell-off, however, and our Senior Technical Strategist believes that this may have been a misleading EURUSD breakdown.
Keep risk on any short positions tight, as there is distinct risk of sideways chop in US Dollar pairs.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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