FOREX ANALYSIS: Australian Dollar Likely Topped

ssi_gbp-jpy_body_Picture_1.png, FOREX ANALYSIS: Australian Dollar Likely Topped

AUDUSD – Retail forex traders are now net-long the Australian Dollar versus the US Dollar (ticker: USDOLLAR) for the first time in a month, and the sharp shift in retail sentiment warns that the AUDUSD may have set a significant top through recent trading.

A sharp Australian Dollar sell-off from the November high was the first signal that the AUD may have set a significant peak, and we’ve likewise seen the number of retail traders long AUDUSD surge 32 percent since the peak. A similar 28 percent tumble in the number of traders short now leaves crowds at a net-long AUD position for the first time since October.

We use our proprietary Speculative Sentiment Index data as a contrarian indicator to price action; if the majority of traders are buying, we prefer to sell. Indeed, our retail sentiment-based FX trading strategies took a AUDUSD short from $1.0378.

--- 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.
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  • Most Actives
    Most Actives
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    N21.SI
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    BS6.SI
    0.141-0.002-1.40%
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    5NF.SI
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    BDR.SI
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    43B.SI
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    0.345-0.060-14.81%
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    USDSGD=X
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    1.7642+0.007+0.40%
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    73.7120-0.41-0.55%
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    AUDSGD=X
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