June Dollar and Euro, COT Style 03/18/2012

March 18, 2012, Posted by ttbm at 12:28 pm

Read our weekend COT update and analysis on the June Dollar and Euro, and where we think both are headed.

Bottom Line: I have seen extreme Blocks in the FXE to the downside and in the UUP to the upside and that suggests the Dollar will head lower before making new highs and the Euro, higher before new lows. Otherwise, the overall COT data suggests the Dollar remains longer term bullish and the Euro, longer term bearish.

The June Dollar now shows a bullish COT profile as Commercial selling, Large Spec buying, Open Interest and the long term Stochastic indicator have all hooked higher. Meanwhile, Commercial or smart money buying remains in low bullish territory. The weekly Risk O Meter indicators remain neutral to bullish but have seen a bullish hook unfold, suggesting higher prices for the June Dollar. The Elliott Wave analysis suggests the Dollar has one more push higher to the adjusted wave C target of 81.555 before any pullback would unfold. While I expect the Dollar to head much higher over the long term, I suspect in the near term we have a chance that the current bounce is over and we’ll see a pullback to the 78.75 and 78.14 targets before making new highs.

The June Euro has seen a small shift in it’s COT profile from extreme bearish to slightly neutral. As Commercial or smart money buying has come off the recent extreme bearish readings, while Commercial selling, Large Spec buying and the long term Stochastic indicator has continued to move above extreme bearish territory as well. Open Interest has hooked higher and that suggests Commercials are stepping up their volume of buying the current decline. The Risk O Meter Series remains neutral to bearish, while the Stochastic Risk O Meter is neutral with a continuing bearish hook threatening to unfold. The Elliott Wave analysis suggests that the Euro has one more push higher to the 1.3629 wave C target before it heads to new lows.

The UUP shows evidence that the Dollar is set to decline as we received extreme Blocks (9) during last weeks reversal lower. This suggests the UUP will have to pullback to the 21.82-21.60 levels before heading to the next upside target of 23.19 and above. The FXE also saw extreme Blocks (5) at the current small spike reversal low and that suggests it will have to move higher to the 135.38 target before resuming it’s longer term bearish trend. The further the FXE heads lower below the extreme Blocks and the UUP above it’s extreme Blocks of last week. The larger the reversal move will be for both currencies.

The June Australian Dollar has a COT profile that remains bullish to neutral as Large Spec buying remains bullish and Commercial selling, Open Interest and the long term Stochastic indicator remains in extreme bullish territory. However, we have seen Commercial or smart money buying has hooked back into the neutral zone and that suggests the current choppy to lower price action will continue. With Open Interest at high levels, the Aussie is setting up for a major top. The weekly Risk O Meter indicators remain bullish with short term bearish down ticks suggesting choppy price action. The Elliott Wave analysis suggests that the Aussie has one more push higher in a wave 5 of C to the 1.0913 target.

March Dollar and Euro, COT Style 03/11/2012