EURUSD Long/Short Setup - Detailed Analysis

The latest COT Report came once again with dominating long positions just as we predicted. But now we must be a bit more careful since the “Dealers” short contract sizes are above 400 000 right now, which is with more than 100 000 more than the previous record. Any time a trend-reversal may take place.

On Friday price broke over the upper-monthly trendline. This last happened in March 2018 and resulted in a 1900+ PIPS trend-reversal.

Right now, we have 2 possible scenarios for the EURUSD to play out:

1. Price reaching the monthly critical zone just below the 1.18000 mark. There it will create a small correction towards the upper-monthly trendline near 1.16000, where buy pressure will once again kick in and create a second top near the monthly critical. After that a stronger correction towards the monthly critical area near 1.42000 will happen. There we have a double confirmation: the monthly critical aligns perfectly with the 0.618 Fibonacci level.
2. Price gaining once again a strong buy momentum once it reaches the upper-monthly trendline. It will break above the monthly critical area near 1.18000 and head towards the 1.20000 mark.

Crucial will be the price behaviour once it reaches the upper-monthly trendline near 1.16000. Next week’s COT Report will be the key factor to determine this.

Happy trading!