A quick look at some sentiment data to see if it provides any clarity or insights into what could unfold in the coming days.

It is generally pretty difficult to get much information when it comes to trader sentiment. There are four main sources that I’m aware of: futures open interest, Commitment of Traders reports, Oanda’s FXLabs and FXCM’s Speculators Sentiment Index.

I don’t have access to futures open interest so we’ll have to do without that one for now.

It’s hard to discern too much from the Commitment of Traders report for Euro Globex. Large traders have become less long over the last month, down to about the same level as the small speculators. This seems to suggest that 1.50 is a pretty big resistance level.

One CoT chart that leapt out at me was the e-mini S&P 500:

Here we have large traders long, and the longest they been since March, while small speculators are going short. This seems to point to continued upside for the S&P 500, or at least that’s what the smart money is betting on.

If that means that risk is still on then a break above 1100 for the S&P 500 could lead to a follow-on break for EUR/USD through 1.50 (especially with gold continuing to make new highs such as it did today).

Oanda provide some useful tools to see what the small speculator is up to. Here’s their current open positions blotter for EUR/USD:

This shows that around 27% of open positions are long and were opened above 1.4970, while only around 11% of shorts were opened above 1.4970. This means that a lot of people have recently gone long looking for a break above 1.5050.

I want to now throw in an historical summary of long and short orders for EUR/USD. The darker the area the more orders (whether market, limit entry, stop or profit) at that price.

On the buy side there is a smattering of support at around 1.4950, with the next decent support level between 1.4800 and 1.4830. If we make new highs, buy orders kick in just above 1.51.

On the sell side there is a wide band of sell orders stationed between 1.5000 and 1.5050. That band of sell orders has been building up over the past few weeks now.

FXCM’s Speculator Sentiment is broadly in line with the Long-Short Positions Ratio FXLabs information. The SSI data shows that 60% of retail traders at FXCM are short EUR/USD (as of last Thursday, 5 November).

Oanda also shows that the majority of positions are short and have been for the past week.

This Oanda and FXCM information more than likely points to what the dumb money is doing. With that in mind, my take is that the 1.5000 is not going to be broken this week. Instead we’re going to see another dip, probably to around 1.4850 to shake out all the current longs, before the move up continues and we break 1.5060 in tandem with a break above 1100 in the S&P 500 (who can tell which is the cart and which is the horse between the currency and equity markets any more).