Good morning traders. Just going through some various reports and newspaper articles this AM and came across a couple of interesting data points regarding EUR/USD. The CFTC publishes reports each week regarding the positioning of futures traders in the various futures contracts traded. Conventional wisdom states that during periods of excessive bullish or bearish positions, it can often note that a change in trend is forthcoming.

Another measurement, although it measures sentiment, not number of contracts, is the Daily Sentiment Index (DSI). It too can prove insightful at isolating trend changes.

Combining the two, like any analysis approach, will add a level of robustness to one's conclusions. Thus, as noted in the chart below, we currently have both CFTC and DSI data at levels, historically speaking, that have isolated turning points.

EUR/USD - a turn higher at hand?

Click on image to enlarge!

While both Todd and I have noted that the chart pattern/wave count (or lack thereof) in EUR/USD is a mess, one cannot argue that the move lower off the May 5th highs appears corrective and thus lends some further support to the above data points.

Time will tell. Unless you are a longer-term trader who has tremendous conviction in here, we are not suggesting long EUR/USD positions - but it would be foolish to ignore these data points while conducting ones analysis.

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