EUR/USD Presents Short Opportunity on Long-Term Chart

11/20/2009 12:01 am EST

Focus: FOREX

EUR/USD looks to be on track to set a double top 1.5065, the RSI oscillator clearly divergent with the new highs in price action. The long-term charts are also supportive, having shown a formidable bearish engulfing pattern two weeks ago that has yet to be invalidated. We will look for confirmation of a trend change on a daily close below support at a rising trend line established from the lows in March (now at 1.4790) to establish a short.

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The ratio of long to short positions in the EUR/USD stands at -1.39 as nearly 58% of traders are short. Yesterday, the ratio was at -1.70 as 63% of open positions were short. In detail, long positions are 15.9% higher than yesterday and 12.4% stronger since last week. Short positions are 5.1% lower than yesterday and 4.6% stronger since last week. Open interest is 2.7% stronger than yesterday and 6.0% above its monthly average. The sharp shift towards euro long positions (US dollar shorts) signals that this may be the start of a sharper EUR/USD pullback.

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