EURUSD Trade Setup/Analysis

[vchandra11 8]

Hi Zack

If time permits, would  you be able to review and post comments on attached setup for our team. Thank you.

Regards

Vinod

 

[Zack Zarr 5]

Thank you for this question Vinod.

Here is my analysis from the long term and short term point of view on EURUSD:

 Long Term

Looking at the weekly chart of EU and the positioning of the large speculators and their counterpart, the commercials, it seems that everyone is bearish on EUR. See chart below with some annotation.

The short positioning of the large specs as well as the long positioning of the commercials looks very similar to the time prior the sharp drop in EUR back in early-mid 2014. One important factor to pay attention to is the number of shorts that large specs possess at the moment which is almost near the past 2 year high. The color coding of the tabulated data also suggest the same thing (see below)

It will take quite some time for these short to get closed and until that time, it is very unlikely that wee see any sharp jump in EURUSD.

 

Short Term

The daily chart of EU shows some interesting actions which can help she some light in the price action in recent weeks.

The main positioning activity has been to add shorts very slowly since fall 2018. Almost every bullish positioning has been short lived. The major point in recent weeks has been the fact that the high point and drop near 1.14 on March-end was not caused by any major change in positioning size. hence, that area does not have much significance in terms of supply (as shown on the chart).

The major short adding activity happened last week where large specs added 24K shorts. In my opinion, that zone has more significance than the upper area (which is where Vinod has his SZ).

Based on these recent positioning of large specs, below is some possible trade ideas for EU.

Trade Ideas

The 4H chart of EU is used to draw some SZs where some short trades can be taken. I hope the explanations above clarify the reasoning of taking these short trades.

The price is currently at the SZ which initiated 24K shorts. Other shorting opportunity comes when price reaches to the upper SZ where lots of shorts started there.

 

Thank you for the question  and Good Luck,

Let me know if you need more clarification.

 

Zack