Get Ready for a Euro Rally. Or Don't ... and I'll Get Ready for You

The US dollar has had a torrid rally. But my charts suggest a correction is due.

Maybe that is what this latest bout of currency-market volatility is telling us.

Volatility is often a precursor to a change in trend (in all time frames). We know dollar sentiment is overwhelmingly bullish – it seems a one-way bet right now. But Mr. Market is watching because he loves one-way bets. 

I'm not betting big on a correction right at the moment.  But I have told my subscribers to get ready. Today’s price action plus sentiment data suggest a speculative extreme may be near. 

Sentiment extremes suggest a turning point is imminent. Be careful, all you euro bears!

I watch open interest levels in the currency futures market. It is a good longer-term measure of sentiment. Often times, open interest reaches an extreme just ahead of a trend change. Below is a currency futures chart for the euro. The open interest level is huge and sentiment for the euro is extremely bearish: 

The red circles denote peaks in open interest that corresponded with key lows in the price of the euro. Given the extreme levels, I think euro bears should be very careful.

I am monitoring the major pairs closely.  Because if a correction lower in the dollar does materialize at these levels, it would likely be at a least multi-day, and probably a multi-week, event -- in other words, something playable. 


Analysis like this is one way I  keep my subscribers prepared. Until recently, it's been up to them to follow along and follow through.

Now, however, they don't even need to! 

They can check out for a day ... a week ... or a month at a time and not have to worry about missing profit opportunities. That's because I'm launching a new auto-trading opportunity they can use to replicate the trades I recommend and execute in my personal account ... in their own accounts!

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Thank you. And be careful out there.


-Jack

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