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Market Sentiment..but not just with my broker.

I’ve been thinking a lot about market sentiment, basically this is “following the crowd”. For instance on my brokers trading platform there are the following high sentiment trades.

SELL USDCAD 97% SELLING
BUY NZDUSD 93% BUYING
SELL AUDUSD 95% BUYING??? Which is bizarre I’ve been selling this for a week or two with success.

Let’s go have a look at dailyfx.

SSI: The Speculative Sentiment Index

Symbol LastWeek Present %Long Change:
Open Interest
Signals
EUR/USD -2.06 -1.37 42% -4.9% Bearish  
USD/JPY 3.55 2.49 71% -11.4% Bullish  
GBP/USD -1.57 -1.05 49% -6.0% Bearish  
AUD/USD 3.18 5.09 84% 8.0% Bearish  
GOLD 1.27 1.68 63% -6.0% Bearish  
SPX500 -1.74 -2.44 29% -7.0% Bearish  

Look at AUDUSD there 84% are buying!!!!! but it’s bearish on their signals (you can see this page here (new window)).

I can see why they are buying – it appears to have stalled at the bottom there on the daily chart. So what to do?

Well – I think what I’m going to do is put a trade on to BUY the dips an AUDUSD. Let’s see how we get on. I’ll post here when I get the trade on but not yet. Confusingly http://www.dailyfx.com/technical_analysis/sentiment?technicalSentiment=AUD/USD says that he was wrong saying it was going bullish. Sheesh. Can’t you people make up your minds?

So I think AUDUSD buy is a possible freight train as he describes it on dailyFX but not yet. I’ve got a sell that has been hanging around for a while so I’ll let that go.

Other trades? I think GBPJPY is having a rest. My feelings actually looking that (and it’s just feelings which can be wrong) is that GBPJPY will turn down whilst AUDUSD will turn up. When, I don’t know, but the time will come shortly I reckon – but then I could be wrong. Disagree? cool, comments below let’s work this out together!

I’ll be watching the news at key times –

Incidentally there is some talk on DailyFX about EUR meltdown…. I’m always nervous trading EURUSD, they are both the biggest currencies in the world and they tend to be very volatile. I’ve not got all day to sit there staring at charts. I have a job! (although they do let me have them running in the background).

Also on the members area side I’ll be adding tools I find good and bad and telling you what I thought of them and if they helped my trading.

Leave your comments below especially if you have any trading ideas or think I’ve missed anything. (which I probably have).

UPDATE: put AUDUSD buy on about 10 mins ago in profit closed AUDUSD sell small loss, but that’s engulfed in the profit anyway.

UPDATE 2: I’m the king of the swingers! anyway – I closed the buy and went SELL before the news. Which was good because USD is now getting stronger due to higher than expected data.

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