EUR: Implications of Turn in IMM-COT Positioning

There has been a lot of chatter this morning about how non-commercial or speculative euro positioning turned positive for the first time in 8 weeks. But some people may be wondering, what does this really mean? To answer this question, I put together the following chart. The Green Line is the EUR/USD and the White Line is net EUR spec positions according to the CFTC. The arrows point to the instances where positioning has shifted from negative to positive or vice versa. As you can see, more often than not, the “turn” in net positions has led to a continuation move in the currency. The initial move towards zero represents people getting stopped out (we saw this last week) and then the spec positions grow in favor of the new direction as more traders join in on the move. Therefore based upon the COT data, the EUR/USD rally could continue. The next level of resistance in the EUR/USD is 1.3750, the 61.8% Fibonacci retracement of the November to January sell-off.

About Kathy Lien 235 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

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