28 Apr 2014
EUR/USD far from extreme positioning and sentiment - FXStreet
FXStreet (London) - Goncalo Moreira CMT, FXStreet Technical Analyst comments that the most noticeable change in EUR/USD sentiment data this week is the reduction in the number of participants holding a long-term bearish bias.
Key Quotes
“The number of bullish short-term forecasts has bottomed four weeks ago, and is rising now at 45% aprox. This is one of the interesting aspects to follow in the weeks ahead since the overbought sentiment range for EUR/USD is between 70 and 80%.”
“The picture we have from the latest sentiment poll release shows a long-term mode higher than the median, being the mean the lowest one. 1.3800 is the most mentioned value among participants when asked where will the EUR/USD quote in 3-month to the future.”
“In surveys such as the one conducted by Fxstreet, the mean is usually skewed by extreme results. The case we are confronted with this week is the opposite: it's the mode the one which has separated the most from the rest. This means the data is skewed, but not because of a few outliers.”
“Four weeks ahead, traders and analysts are forecasting 1.3700 the most (the mode), and the median and the mean are hovering slightly above it.”
“Traders are less convinced where the euro will be in three months ahead than one month ahead. This may sound obvious, but sometimes we have the opposite picture. A new correction in the EUR/USD chart would destabilize this picture.”
“What does it mean for traders? Crossing the sentiment data from our weekly poll with that of positioning either mined at the CFTC (the Commitment of Traders report) or from retail sources, we find that the EUR/USD will probably hit a new multi-month hight before it hits a so-called “overbought” range.”
“Technically speaking we had several very healthy corrections in this pair during the month of March and January, and also going back to 2013: end October, just to mention a few of them. It was everything but an orderly trend what we saw in this major pair since the lows of July last year, but we can now establish these areas where the EUR/USD would be considered overbought. These correspond to a net-long bias of aprox. 60K contracts in the COT (futures only) and a 80% retailers being short this market on a daily closing basis.”
Key Quotes
“The number of bullish short-term forecasts has bottomed four weeks ago, and is rising now at 45% aprox. This is one of the interesting aspects to follow in the weeks ahead since the overbought sentiment range for EUR/USD is between 70 and 80%.”
“The picture we have from the latest sentiment poll release shows a long-term mode higher than the median, being the mean the lowest one. 1.3800 is the most mentioned value among participants when asked where will the EUR/USD quote in 3-month to the future.”
“In surveys such as the one conducted by Fxstreet, the mean is usually skewed by extreme results. The case we are confronted with this week is the opposite: it's the mode the one which has separated the most from the rest. This means the data is skewed, but not because of a few outliers.”
“Four weeks ahead, traders and analysts are forecasting 1.3700 the most (the mode), and the median and the mean are hovering slightly above it.”
“Traders are less convinced where the euro will be in three months ahead than one month ahead. This may sound obvious, but sometimes we have the opposite picture. A new correction in the EUR/USD chart would destabilize this picture.”
“What does it mean for traders? Crossing the sentiment data from our weekly poll with that of positioning either mined at the CFTC (the Commitment of Traders report) or from retail sources, we find that the EUR/USD will probably hit a new multi-month hight before it hits a so-called “overbought” range.”
“Technically speaking we had several very healthy corrections in this pair during the month of March and January, and also going back to 2013: end October, just to mention a few of them. It was everything but an orderly trend what we saw in this major pair since the lows of July last year, but we can now establish these areas where the EUR/USD would be considered overbought. These correspond to a net-long bias of aprox. 60K contracts in the COT (futures only) and a 80% retailers being short this market on a daily closing basis.”