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FOREX ANALYSIS: Trading Systems Sell Euro on Major Sentiment Shift

David Rodriguez

ssi_eur-usd_body_Picture_7.png, FOREX ANALYSIS: Trading Systems Sell Euro on Major Sentiment Shift

A noteworthy shift in retail FX trading sentiment warns that the Euro may have set a short-term top versus the US Dollar (ticker: USDOLLAR), and one of our sentiment-based trading strategies has accordingly taken a short position from $1.3193.

Traders have remained net-short the EURUSD since the pair traded above $1.27 through mid-November, and normally we would treat this as a contrarian signal in favor of further strength. Yet the number of traders short has fallen by 14 percent while longs are up a noteworthy 38 percent since last week.

Timing reversals is risky, but we see early evidence of an important EURUSD turn lower.

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

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