Pivotfarm's blog

As EURUSD nears 5 months highs retail short positions have become increasingly stronger, today 68.62% of retail traders in our data set are short. This has pushed EURUSD into the Strong Long zone. What's also worth noting is EURGBP which is the long zone, however retail traders have become increasingly short this pair even though it continues to trend higher.

This weeks analysis of the COT Index and Retail Trader positioning

Intervention. For the first time in a decade we're seeing multi-nation intervention to help weaken the Yen, as a beleaguered Japan works to recover from a multi-faceted disaster. Weakening of the Yen eases some of the strain on Japanese exporters, many of whom are being forced to keep factories closed due to power shortages and structural damage after the earthquake.

Some dramatic JPY strength overnight is pushing JPY crosses into in the short zone. USDJPY remains in the strong short zone as it has been for the last few months. GBPJPY has edged its way into the short zone, and although still in the neutral zone, EURJPY is not far behind. Developments with the Fukushima Nuclear plant could have a major impact on overall JPY positioning.

In yesterdays session we saw some very 2 sided action especially in the Euro, we initially saw a EURUSD sell off as a flight to the safety took hold due to a sell of in far eastern equities. In the early part of the NY session this fear reversed and strong buying took us back the levels at which we started the day. this show of strength has pushed GBPUSD and EURGBP in the long zone and edges EURUSD into the strong long zone.

Some big moving news events today with the release of the German ZEW Eco Sentiment at 06:00 EST which is likely to have an impact on all EUR crosses if we have a deviation from consensus. Out of the US we have the TIC report released at 09:00 EST and the big one is the FOMC Statement at 14:15 EST.

After Fridays action EURUSD battles its way back into the long zone with more than 60% of retail traders short the pair. The tragic events in Japan led to some dramatic action with the USDJPY, however this has done little to change overall retail positioning with over 75% of traders long USDJPY it stays firmly in our short zone. The key news events likely to effect retail positioning are EUR Industrial Production (06:00 EST) and AUD Monetary Policy Meeting Minutes (20:30 EST)

Most pairs seem fairly neutral today, although action early in the London session seems to have some volatility behind it. Many potentially market moving events today that are likely to effect positioning key to watch will be the CAD employment data released at 07:00 EST, this pair has maintained a strong bearish bias in our research for many weeks (77% of retail traders long). The employment data released today could have a dramatic impact on positioning.

We're sitting pretty neutral across most pairs at the moment, the pair most likely to see a shift in retail positioning today is GBPUSD with Manufacturing Production released at 4:30 EST and the BOE interest rate decision coming out at 7am EST.

Most pairs are currently having a breather in the neutral zone, with GBPUSD and EURUSD pulling back from the strong long zone we were in a few days ago. EURCHF despite a strong pullback is still hanging on in the short zone, CHF CPI at 3:15am EST could have an impact on this. The big news events of the day effect the AUD with a speech by RBA Gov Stevens and Employment Change/Rate at 7:30pm EST.

EURUSD remains in its uptrend, however we are seeing a rather large sentiment shift in retail positioning with the EURUSD very close to Neutral territory after a spell in the strong long zone, GBPUSD is now also in the Neutral zone. Key news events that could have an impact on positioning are CAD Housing Starts released at 8:15 EST, and also tentatively timed is a speech by BOE Gov King.

EURUSD continues its consistent medium term uptrend at the same time retail traders are consistently increasing their short position to 65.97%. The big news event of the day is CAD Building Permits 08:30 EST other than that Trichet speaks at 07:00 EST, most other events of the day are relatively minor in historical effect.

GBPUSD continues to remain in the strong zone, consistently moving higher with 67% of traders short the pair, EURUSD is painting a very similar picture. Retail trader positioning still remains fairly extreme with most retailers LONG the USD. Action over the last few weeks has been very much contrary to that opinion. The Euro Rate Decision 7:45am EST and ECB Press conference 8:30am EST often have dramatic impacts on the EUR, it will vital to keep an eye on these developments

No major changes in terms of retail positioning today. There are some news events today that could lead to shifts in the positioning. Firstly out of the UK Construction PMI at 04:30 EST, US ADP Non-Farm follows at 08:15 this report has increased in importance over the years and is used as a guide for the big Non-Farm event. Bernanke will be testifying at 10:00 EST, later in the day at 19:30 EST market moving news from Australia with Building Approvals and Trade Balance released.

This morning ahead of the London session we're seeing some strong shifts in retail positioning, USDCAD, USDCHF and USDJPY have been in the strong short zone for a long while, with an unbelievable 80%+ or traders long while these pairs have been consistently selling off! On the flip side of this coin AUDUSD has entered the long zone with 61% of traders short as it nears multi year highs! GBPUSD has been consistently making higher highs and is now kissing a major resistance area at the same time 71% of traders are short this pair!