FX.co ★ EUR/USD

EURUSD. Hello everyone. The fresh COT report on euro futures for October 13 has been released, and it shows an interesting reversal in the behavior of major players. Open interest increased slightly, by only 4 250 contracts to 874 541. The number of traders remained at 346. The market continues to be filled with money, but the growth rate has slowed. Now by categories. Large speculators Non-Commercial for the first time in several weeks reduced long positions. They fell by 20 091 contracts to 222 929. At the same time short positions increased by 18 150 contracts to 360 502. The net short position of speculators increased from 99 332 to 137 573 contracts. This is a very aggressive build-up of shorts, and it occurred alongside a reduction in longs. Speculators are not just selling, they are fully switching to the short side. Commercial participants, on the contrary, sharply increased long positions by 17 065 contracts to 521 361 and reduced shorts by 22 136 contracts to 410 136. Their net long position grew from 72 024 to 111 225 contracts. This is a very powerful bullish signal. Commercials are actively buying the dip. In the extended report the picture is as follows. Dealers and intermediaries slightly increased long positions and reduced shorts, their net short position decreased. Asset managers increased long positions by 3 227 contracts to 502 676 and reduced shorts by 6 810 contracts to 302 758. This is an important point: asset managers, who increased shorts last week, are now again increasing longs and reducing shorts. Leveraged credit funds sharply reduced long positions by 15 346 contracts to 120 021 and increased shorts by 8 394 contracts to 188 022. Their net short position grew. Now compare this with the levels. The long-term balance of COT data is at 1.14623. The balance of the current futures contract is located in the zone 1.14021-1.13817. The options balance is at 1.14417. Downside targets are 1.11613 and 1.11125. The weekly closing price was 1.12390. The start of the call zone of options is at 1.12263. Pay attention to the key point. The weekly closing price 1.12390 ended up above the start of the options call zone 1.12263. This is an important signal. A close above this level may indicate a possible continuation of the correction upwards. In other words, the bulls managed to hold above the first resistance, and now they have a chance to continue the move toward the balance zone. Look at how the levels line up. The options balance 1.14417, the long-term COT balance 1.14623 and the balance of the current futures contract 1.14021-1.13817 form a tight resistance zone around 1.138-1.146. The closing price 1.12390 is below this zone, but above the start of the call zone 1.12263. This creates an interesting situation. On the one hand, the price is still below the main balances, which maintains a bearish priority. On the other hand, the close above 1.12263 gives bulls hope for a correction toward the balances. What this means for further prospects. The COT data for October 13 show that speculators continue to build shorts, and very aggressively, while reducing long positions. This is a bearish signal. But commercials and asset managers are actively increasing long positions and reducing shorts. These are bullish signals. The market remains divided, but this time the balance is beginning to tilt toward the bulls, as commercials and asset managers are acting more coherently. Open interest increased slightly, which indicates that the market is not receiving a significant inflow of new money. This may mean that the current move will soon exhaust itself. Now on targets and resistance. The closing price 1.12390 is above the start of the call zone 1.12263, which opens the road for an upward correction to the balance zone 1.13817-1.14623. If bulls can hold above 1.12263 and continue the move, the first target will be the balance of the current futures contract 1.14021-1.13817, then the options balance 1.14417 and the long-term COT balance 1.14623. However, for this to happen, commercials and asset managers need to continue increasing longs, and speculators need to start covering their shorts. Until that happens, the correction may be short-lived. If the price fails to hold above 1.12263 and falls back below, the bearish scenario will become dominant again. The nearest downside targets are 1.11613 and 1.11125. While the price is above 1.12263, bulls have a chance, but it is fragile. Thus, the picture remains uncertain, but with a hint of an upward correction. The key level to watch is 1.12263. While the price is above it, bulls maintain a chance to continue the correction toward the balance zone 1.138-1.146. If the price returns below, the bearish scenario will resume, and the targets 1.11613 and 1.11125 will remain relevant. The next COT report will show whether speculators continue to increase shorts or whether commercials can turn the tide. For now we remain in observation mode and wait for the price to approach the key levels. Good luck.