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Week Ahead: COT Highlights Potential For Further USD Weakness

Week Ahead: COT Highlights Potential For Further USD Weakness

THIS WEEKSo last week ended a rather choppy week in the markets with very little volume and even less real price action to speak of. Essentially markets chopped sideways as they essentially weight for the next key catalyst to spark a movement.The good news this week, unlike last, we aren’t short of risk events, although a relatively quiet Monday, the rest of the week sees more key events and data releases with the ECB and Non Farm as usual.Into the events Non Commercials seem to have positioned themselves in line with recent trends, therefore suggesting further weakness in the US Dollar against the Pound and Euro, but favouring further weakness in the Aussie vs the US Dollar. A lot will depend on the US data this week as the market seems to be largely data driven at the moment and US data has struggled to beat expectations although has improved more recently (is it the expectations that need to change or the data that needs to improve). Poor jobs data out of the US is likely to cause the largest moves and further US Dollar weakness, good data could spark a minor US Dollar recovery.

EUR/USDShort: 1.3470RTAS Order Book systems remain short in EUR/USD and the pair gapped lower at the open. Retail Buyers have started to buy this pair again but we need to see this trend continue as so far any buying has been met with further selling on any slightest push higher pointing towards further upside risk.Pair traded in a relatively tight range last week capped to the upside by the resistance at 1.3570 and supported at the 1.3470 level. This pair now offers really nice breakout plays with the most potential in the Retail Order book for downside moves.

EUR/USD Daily” border=”0″ height=”999″ width=”1112″ />Whilst we remain below the key resistance at 1.3560 we prefer a correctional move towards the 1.3390 mark. However, we concede the weakness in the US dollar is hard to get away from at the moment and a break of resistance could see this pair push higher.

EUR/USD Daily” border=”0″ height=”959″ width=”1112″ />The COT report continues to highlight the potential for a push higher as Non Commercials continue to expose themselves to further strength in the EUR/USD. With the pair now through weekly resistance we could see a push back to support before a much larger, longer term move higher, with the next key weekly resistance coming in around the 1.3720 mark.

EUR/USD Weekly” border=”0″ height=”999″ width=”1280″ />

GBP/USDLong: 1.6040Pair continued to grind higher on Friday towards resistance at the 1.6200 mark. Order Book continues to remain at extremes and each push higher is likely to require some chop or correctional moves in order to clear out the extreme positioning and make room, but so far the Pound has held up really well and despite this not really being backed up by fundamentals so far there is very little to talk it back down.

GBP/USD 240 Min” border=”0″ height=”999″ width=”1112″ />1.6294 is a major resistance point in the GBP/USD as the pair creeps back towards yearly highs. We would expect this level to act as strong initial resistance but the pair is likely going to require a real catalyst to push it back lower again.

GBP/USD Daily” border=”0″ height=”959″ width=”1112″ />COT report has continued to highlight the potential for this pair to push higher with the Non Commercial Momentum Index crossing in early August. Momentum has slowed slightly last week as we approach the yearly highs, and it will be key to watch this level. Break of weekly resistance would open the door to much large moves, rejections could push us lower either as a correctional move or a range traded move.

GBP/USD Weekly” border=”0″ height=”999″ width=”1280″ />

AUD/NZDShort: 0.9370Order Book systems remain short in the AUD/NZD as we have continued to see some minor buying in the cross. Key support comes in around the 0.9250 mark with 0.9350 acting as resistance.

AUD/USD 240 Min” border=”0″ height=”999″ width=”1112″ />The pair has now retraced its initial correctional move higher to 0.9520. Pair now sits at a support level having closed the gap from two weeks ago. A break of support could see us push back towards the 0.9100 level.

AUD/USD Daily” border=”0″ height=”959″ width=”1112″ />COT report Momentum Index shows the Non Commercials coming off of their recent bout of minor buying in the pair and now starting to position themselves further short again. Speculators seem to now be heading towards net long in the pair and this with Non Commercial positioning could point to a further push lower.

AUD/USD Weekly” border=”0″ height=”999″ width=”1280″ />

EUR/AUDShort: 1.4475The RTAS Order Book systems switched to shorts after booking their profit on longs on Friday. Further Retail Buying in the pair caused the initial switch, however the pair now sits at a key resistance point. If it manages to hold above this level we could easily see a push higher, a break back past the secondary support at 1.4445 could open the door for a test of lows around 1.4180.

EUR/AUD 1″ border=”0″ height=”999″ width=”1112″ />The pair has now managed to chop sideways whilst pushing itself out of the oversold territory and has come back off extremes in the Order Book, it is now primed for its next major move higher or lower, if we see further Retail Buying we could easily see a push lower, especially if we see Retail Buying in the EUR/USD cross. We now sit at the key resistance point at 1.4520, this level is likely to be a key catalyst in this pair.

EUR/AUD 2″ border=”0″ height=”959″ width=”1112″ />

EUR/GBPShort: 0.8410Order Book systems have chopped around at current levels with an almost perfectly flat Retail Order Book. Systems jumped short on Friday after a single bar attempt at longs. Pair jumped lower at the open and now sits below a key support level, if the pair can break the 0.8340 mark we could see a much larger push lower.

EUR/GBP Daily” border=”0″ height=”959″ width=”1112″ />Daily chart continues to point to further EUR/GBP weakness but this pair does have a habit of chopping around as it makes any real progress. Strong support does come in below and this could be key to the next move in this pair but there is a lot of room in the Retail Order Books in either direction.

EUR/GBP Daily” border=”0″ height=”959″ width=”1112″ />

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