Last week the March 2013 euro futures contract opened at 1.34680 and closed the week at 1.36650. Note the euro opened 2013 at 1.32570 and in the first week of January almost touched 1.30000 before this latest ride up. In January it seemed very quiet from the EU regarding the debt crisis. We did hear from numerous EU leaders that they thought the worst was over. That is of course until today, more on that later.
On the daily chart you see ADX over 50 reflecting a very strong trend. MACD has added divergence from above the signal line and Stochastics have been in deep overbought territory until today’s price action. On the weekly chart you can see ADX at 47.9 reflecting a strong trend and weekly Stochastics are in deep overbought territory. You do not need to look beyond the weekly chart to see what happened in the latest move up from 1.22000.
Proceed to Page 2 for the latest COT Data...
Looking at the Traders in Financial Futures COT report you see how Dealer/Intermediary (red line) started dropping net longs mid-July and entered a net short posture the week of Dec 17. All along they continued to add to net shorts as Managed Money added to net longs pushing the euro higher and higher. If you want to catch the ride down in the euro, watch for a drop in net shorts by Dealer/Intermediary.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
Today we are hearing about political unrest in Spain and Italy causing an increase in10-year bond yields, Spain’s jumped 23 basis points, Italy went up 15 basis points, and Portugal’s yield jumped 26 basis points. German Finance Minister Wolfgang Schaeuble was quoted Feb. 1 saying “the euro crisis is not over, however we are in a much better position than a year ago.”
So will the euro have a sustained drop? That question could very well be answered on next week’s COT report. Have a prosperous week.
To read my market views daily you can follow me on Twitter at http://twitter.com/TrendsinFutures