Thursday, January 20, 2011

EURUSD short squeeze?

See USD and EUR COT with forexrazor comments:

This was a very big weekly increase in the euro OI. It is even bigger when spreading was reduced, down 5,738 contracts to 13.2% of the total. The big up in the OI was mostly the work of the big spec, although the small specs added to their short position also. What is interesting about the report is the market action after the end of the period. The big increase in the OI was done when the market was going down. After the hook bottom and turnaround on Tuesday, the market rallied sharply, closing at 1.3382, and giving the new shorts a loss. Total spec short positions was up over 24,000 contracts to almost 50k total. The Thursday market activity on the big up day resulted in liquidation of 11,112 contracts (futures only). Unless there was additional short covering on Friday, with a big decline in the OI, we can probably anticipate more of a short squeeze soon.

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