IG client sentiment data send bullish signal on NZD/USD
Retail traders are increasing their already short positions in the NZD/USD pair, according to IG positioning data, leading to a bullish contrarian trading bias.
Bullish signal on NZD/USD:
- IG client sentiment data are sending a bullish contrarian trading signal for NZD/USD
- The positioning figures show retail traders are short the pair and that their short positions are growing
IG client sentiment data bullish for NZD/USD
Market confidence in stocks, especially in the US, is falling as traders worry about rising Covid-19 cases in the US and Europe, a lack of progress in the talks on a US fiscal stimulus program and caution ahead of next Tuesday’s US elections.
Nonetheless, these fears do not seem to have spread to the currency and commodity markets, and IG client sentiment data are currently sending out a bullish contrarian signal on NZD/USD, which is widely seen as a 'risk on' currency pair.
IG client sentiment data for NZD/USD
The figures show 27.51% of traders are net long, with the ratio of traders short to long at 2.63 to 1. The number of traders net long is 14.42% higher than yesterday and 7.69% higher than last week, while the number of traders net short is 26.92% higher than yesterday and 71.78% higher than last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net short suggests NZD/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZD/USD-bullish contrarian trading bias.
NZD/USD price chart, daily time frame (28 June – 27 October 2020)
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