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hello traders,
starting to wonder if the index has gone “too far too fast” as sentiment towards the Buck is once again at or near multi-year extremes. On Thursday, for instance, our favorite metric for measuring sentiment the Daily Sentiment Index or DSI saw extreme readings in theeuro, yen and franc as they all fell to just 3% bulls. Conversely the DSI for the ICE Dollar Index showed a reading of 95% bulls. From a contrarian standpoint, such deep conviction in the direction of the dollar is a bit unnerving to say the least - especially heading into payrolls. Interestingly we had a similar setup last month around payrolls as the euro printed 3% bulls on the DSI the day of the release. This led to a sharp rally in the single currency the following week as positions were adjusted. Of course the same thing doesn’t have to happen here, but with market participants all seemingly leaning the same way we wouldn’t completely discount it either. In the FXCM US Dollar Index the key price level to watch looks to be 11,310 as this marks the 78.6% retracement of the 2009-2011 decline. A clear failure around here could see the index come under a bit of pressure.
with regards,
khan 123
starting to wonder if the index has gone “too far too fast” as sentiment towards the Buck is once again at or near multi-year extremes. On Thursday, for instance, our favorite metric for measuring sentiment the Daily Sentiment Index or DSI saw extreme readings in theeuro, yen and franc as they all fell to just 3% bulls. Conversely the DSI for the ICE Dollar Index showed a reading of 95% bulls. From a contrarian standpoint, such deep conviction in the direction of the dollar is a bit unnerving to say the least - especially heading into payrolls. Interestingly we had a similar setup last month around payrolls as the euro printed 3% bulls on the DSI the day of the release. This led to a sharp rally in the single currency the following week as positions were adjusted. Of course the same thing doesn’t have to happen here, but with market participants all seemingly leaning the same way we wouldn’t completely discount it either. In the FXCM US Dollar Index the key price level to watch looks to be 11,310 as this marks the 78.6% retracement of the 2009-2011 decline. A clear failure around here could see the index come under a bit of pressure.
with regards,
khan 123
