Market sentiment analysis:
- Many of the financial markets are currently trading sideways, awaiting developments in the coronavirus pandemic and the various disputes between the US and China.
- However, there are bullish contrarian trading signals for EUR/JPY[1] and EUR/CHF[2] from the IG Client Sentiment data.
Bullish signals for EUR/JPY and EUR/CHF from sentiment data
Traders are in a wait-and-see mood in many financial markets, waiting for positive or negative news about the Covid-19 pandemic and the various disputes between the US and China. However, taking a contrarian view of IG client positioning is currently yielding bullish signals for both EUR[3]/JPY[4] and EUR/CHF[5].
As the charts below show, both pairs have been heading higher this week.
EUR/JPY Price Chart, One-Hour Timeframe (July 7-14, 2020)
EUR/CHF Price Chart, One-Hour Timeframe (July 7-14, 2020)
Charts by IG (You can click on them for larger images)
Moreover, the IG client sentiment data suggest more gains to come:
For EUR/JPY, the figures show 41.70% of traders are net-long, with the ratio of traders short to long at 1.40 to 1. The number of traders net-long is 1.57% lower than yesterday and 16.93% lower than last week, while the number of traders net-short is 12.56% higher than yesterday and 20.60% higher from last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/JPY 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 EUR/JPY-bullish contrarian trading bias.
For EUR/CHF, the numbers show 71.03% of traders are net-long, with the ratio of traders long to short at 2.45 to 1. The number of
