Commitments of Traders
Aussie has been strong. The pair rallied and closed the week at the double top at 0.7670. With overbought momentum, this market is overdue a correction to the downside but it should be treated as a opportunity to buy AUD in the long term. My bias remains bullish and I expect this market to print fresh multi year highs some times this year.
EURUSD traded higher. The pair closed the week at 1.0780 and it is approaching the anticipated resistance at 1.0850 area. There are many signals to suggest more weakness for USD. FED’s downgraded rate hikes expectations from 4 to 2-maybe 3 this year. NFP printed high but earnings and unemployment rate disappointed.
Speculators covered a massive 11K short positions this week. This is after they covered additional 5.2K in the previous week. At the same time, they added 3K new longs. Open interest remains unchanged for the second week in the row. They are net short 52K, down significantly from 66K last week.
It looks like the tables have turned in Australian Dollar Futures. Speculators switched from being net short to be 5K positions net long. Although, speculative net positions are still below 33 weeks moving average, the fact they now hold more long then short positions makes me believe this market is going higher from here.
As expected, EURUSD climbed higher and closed the week at 1.0639. This is the price level we have not seen since early December. The price looks like there is more upside potential towards 1.0850 resistance. My bias remains bullish given speculative buying continues.
EURUSD formed triple bottom at 1.0380 area and advanced higher. The pair traded as high as 1.0610 just before Friday’s NFP. The market closed at 1.0530 but the pair looks like there is a longer term bullish reversal forming. If the price stays above the current level next week, more upside is likely.
Speculators added 6K longs and reduced shorts by 3K. This is 4th consecutive week when speculators reduce their shorts and a first significant week with them adding longs They are 69K net short, down from 78K last week and 87K two weeks ago. Open interest increased by 6K
Speculative shorts are still at extreme levels. This had proven in the past to be a perfect reversal pattern. As of this week it seems that the bottom could be forming in EURUSD and the reversal migtt be possible, at least in the short term. I would like to see NET positions to be around 60K and the reversal pattern formed to buy the pair again.
EURUSD moved sharply up from the support driven mainly by US election happenings. Speculators kept adding short positions into higher prices and driven them to multi year highs. Historically, these levels where quickly followed by market reversal to the upside.
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