3 Feb 2014
Flash: Ongoing alternation between EUR/USD movement and forecasts - FXStreet
FXStreet (Barcelona) - Goncalo Moreira CMT, FXStreet Technical Analyst notes that the latest data for the Currencies Forecast Poll, released by FXStreet on Friday the 31st, reveals the ongoing alternation between price direction in the EUR/USD and the average of forecasts.
Key Quotes
“This was pointing up towards 1,3587 while the week closed at 1,3487, exact 100 pips below. For this week though, the poll is predicting a lower exchange rate, and for the first since the start of the year it has eradicated the 1,35 figure, in tune with the price erosion we have been witnessing.”
“An expanding volatility begins to be noticed in the dispersion between the participants in their one-month-ahead prognosis. Compared to one moth ago, the difference between the lowest and the highest price levels was below 1000 pips whereas now it has increased to 1500. Contrary to what's happening now, these dispersion levels were relatively low a few ago, and the corresponding calls where the euro should be quoting by now were quite accurate as we can see from the below graph. For two consecutive weeks, the smoothed average and the close price follow the same path.”
“Poll participants changed their bearish views drastically on Friday's survey, a phenomena which happened during the week 45 last year with the crushing decline in EUR/USD and subsequent bottoming around 1,33.”
“What does this mean for traders? If, by next week, there is more consensus between participants, that is less dispersion, and their sentiment is still lopsided, then the situation would be technically similar to the V-shaped bottoms of July and November of last year. On both occasions we had a brief chance to capitalize in the same direction as the poll catching the bottom unanimously. Wasn't sentiment analysis supposed to be contrarian?”
Key Quotes
“This was pointing up towards 1,3587 while the week closed at 1,3487, exact 100 pips below. For this week though, the poll is predicting a lower exchange rate, and for the first since the start of the year it has eradicated the 1,35 figure, in tune with the price erosion we have been witnessing.”
“An expanding volatility begins to be noticed in the dispersion between the participants in their one-month-ahead prognosis. Compared to one moth ago, the difference between the lowest and the highest price levels was below 1000 pips whereas now it has increased to 1500. Contrary to what's happening now, these dispersion levels were relatively low a few ago, and the corresponding calls where the euro should be quoting by now were quite accurate as we can see from the below graph. For two consecutive weeks, the smoothed average and the close price follow the same path.”
“Poll participants changed their bearish views drastically on Friday's survey, a phenomena which happened during the week 45 last year with the crushing decline in EUR/USD and subsequent bottoming around 1,33.”
“What does this mean for traders? If, by next week, there is more consensus between participants, that is less dispersion, and their sentiment is still lopsided, then the situation would be technically similar to the V-shaped bottoms of July and November of last year. On both occasions we had a brief chance to capitalize in the same direction as the poll catching the bottom unanimously. Wasn't sentiment analysis supposed to be contrarian?”