Low Sentiment = Lower Prices

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Low Sentiment = Lower Prices

Posted on 06/07/15

When we see single-digit sentiment readings, we typically look for a reversal in price. With so many traders looking for lower prices, the market has a tendency to reward contrarians on the other side of the trade. There are times, however, where low sentiment simply isn’t enough to reverse a long protracted downtrend in price. The best example of this can be seen in the recent price action in the Japanese Yen.

Since 2012, Japanese Yen registered a sentiment reading below 10% Bulls a total of 85 times. As can be seen by the weekly chart below, those low sentiment readings weren’t enough to cause a sustained reversal in price. Price tended to move sideways before continuing the downtrend lower.

Japanese Yen closed at 7% Bulls on 06/05/15. Using recent history as our guide, odds favor sideways to downward price action over the coming weeks. Using this type information, our Forex Trading Service has already closed out +$9,016 in profits in June. If you’re interested in making money trading Forex, sign up for a free trail today.

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