Hello everyone,
I am new to this particular forum.

One of the main reasons why i find myself posting on this forum is that it would seem that "sentiment" has become an increasingly popular buzzword when discussing financial markets, and especially the currency markets.

What does "sentiment" in the markets mean to you? Is it just describing the general expectations of the market in terms of peoples emotions? Or does it mean something different?

Also, how can we use "sentiment" to trade? Now would seem like a good idea to understand sentiment a little more, as in trading, you can never know to much and never will get close to knowing enough!

Thanks

Bertie

He's in Spain for a conference. He'll be back next week.

__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Hi everyone,

I've got some COT data on the euro, from 2000 to now. The COT Index using data from 2000 to now is showing lowest reading ever, a bearish extreme. Speculators are extremly short and Commercials are extremly long. So I'm expecting a turn soon on EUR/USD. There's a chance that we could go lower, because the % long speculators (=non commercial) ratio isn't below 10 yet (but it is at a low which hasn't been reached since 2000), nonetheless a rally is close by. Using the 52 weeks index we seem a simular picture.

Greetings,
Jeremy

Attached Thumbnails

 

 

Certainly valid points. You can see similar charts for other major pairs in Jamie's weekly COT report:

US Dollar Could Top on Overextended Forex Futures Positioning

Across the board it seems that traders have become overextended on US Dollar-long positions, and it seems only a matter of time before they begin to unwind pent-up dollar demand.

__________________
David Rodriguez is the author of Forex Trading Signals and Forex Trading Weekly Forecast on DailyFX.com.

--------------------------------------------------------------------------------

okay- a few things ive learned through the years of fxing -

go with the trend & dont try and guess when the trend is over

BUT.......

did anyone else see the USD turnaround signs? Not really a strong one with GBP - but a perfect trendline touch on EUR, almost a double top reaction spike on CHF.

All pairs showed serious rection spikes today - without surpassing former lows/highs

Kind of like slamming the brakes on your car.

Wonder if Mon Asian market will dump lots of cash in - or wait because of light US trade week?

Will the slow trade week basically reset all the indicators and make this one giant bull/bear trap?

Set yr stops close ~

Thoughts?

Well I didn't catch this post until today, but it seems like you had quite the prescient observation here. Across the board we see the US Dollar and Japanese Yen substantially off of their trend highs. I personally believe that currencies will remain volatile on a short-term basis but remain within longer-term ranges. This is something I write about here: Currency Trading Market Conditions Difficult to Forecast: Look for Good Range Trading Strategies

My reasons are many, but in a nutshell I believe that markets can only move as strongly as they have for so long. To see that the EURUSD trended from 1.60 to 1.2300 in such a short amount of time tells you that a good deal of consolidation may be necessary before further big moves.

The fact that interest rate differentials are compressing will only diminish trend strength, and I feel that overall market conditions suggest we're not going to break recent range highs or lows any time soon. Of course, a 1.34-1.23 range is still plenty big.

__________________
David Rodriguez is the author of Forex Trading Signals and Forex Trading Weekly Forecast on DailyFX.com.