US Dollar, EUR/USD, GBP/USD, Technical Analysis, Retail Trader Positioning – IGCS Update
Recommended by Daniel Dubrovsky
Get Your Free EUR Forecast
In recent weeks, the US Dollar has been gaining ground against some of its major counterparts, such as the Euro and British Pound. In response, retail traders have been responding by increasing upside exposure in EUR/USD and GBP/USD. This can be seen by looking at IG Client Sentiment (IGCS), which at times functions as a contrarian indicator. With that in mind, is there more room for the Greenback to rally?
EUR/USD Sentiment Outlook – Bearish
The IGCS gauge shows that about 65% of retail traders are net-long EUR/USD. Since most of them are biased higher, this is a sign that prices may continue falling. This is as upside exposure increased by 6.53% and 15.75% compared to yesterday and last week, respectively. With that in mind, the combination of overall exposure and recent changes offers a stronger bearish contrarian trading bias.
Daily Chart
On the daily chart, EUR/USD is showing signs of an increasingly bearish technical bias. Prices have broken under the rising trendline from September. Meanwhile, a bearish Death Cross between the 20- and 50-day Simple Moving Averages is present. Currently, prices are idling just under the 1.0713 – 1.0787 inflection zone. Key support below is the 38.2% Fibonacci retracement level at 1.05. In the event of a turn higher, the moving averages may hold as key resistance, maintaining the downside focus.
Recommended by Daniel Dubrovsky
How to Trade EUR/USD
Chart Created in Trading View
GBP/USD Sentiment Outlook – Bearish
The IGCS gauge reveals that about 56% of retail traders are net-long GBP/USD. Since most of them are biased higher, this also hints prices may continue falling. This is as upside exposure increased by 10.33% and 13.29% compared to yesterday and last week, respectively. With that in mind, the combination of current exposure and recent changes in sentiment offers a stronger bearish contrarian trading bias.
Daily Chart
On the daily chart, GBP/USD recently formed a bearish Death Cross between the 20- and 20-day Simple Moving Averages as well. Immediate support is at 1.2308, clearing it exposes the 23.6% Fibonacci retracement level at 1.2131. In the event of a turn higher, key resistance is at 1.268, which is the current 2023 higher.
Chart Created in Trading View
— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
Comments are closed.