EUR Futures are still consolidating. Last week the Department of Labor gave instructions on how to implement the executive order that partially extends federal unemployment benefits signed by President Donald Trump. But it was not enough to get a dollar out of consolidation. Fundamentally, nothing changed for both currencies. EUR has clear support and resistance levels. To avoid higher risks, it makes perfect sense to trade breakout of the range:

  • potential longs above 1.1920
  • potential shorts below 1.1690

We previously discussed EUR set up for a decline. Based on COT reports commercials are selling currency. It usually indicates the market is topping. Besides, seasonal indicator points move down. The evaluation model shows EUR is overvalued. With that in mind, we prefer to look for and take sell signals. But price action is “the king” and we will follow it whatever side it breaks. Just use proven entry techniques to open a trade and don’t rush.

EUR, Copper and SP500 analysis for August 17 - 21, 2020

Copper Futures were very volatile last week. Usually, it indicates a big move coming. I think this market sets for decline as well:

  • COT – commercials have one of the largest net short positions we have seen for quite a while
  • The cycle is turning to the downside with a potential reversal point at the beginning of November
  • Daily chat has an interesting pattern – all large ranges have been to the downside (it indicates weakness).

So, the question is if there is any short signal coming? Breaking below Fridays low on Monday or Tuesday can be considered as an entry. Alternatively, we can see a few days bounce to 2.95. Rejection at this point is another possible entry to short Copper.

SP500 continues to trade in a tight range. We discussed the fundamental setup for this market to sell-off. But we are getting close to Elections and in most cases, stocks build a channel and consolidate. So, the best thing you can do is to take very short-term trades. Despite the bearish setup, it may take weeks or even months before we get significant pullback (potentially 50% from March low). Talking over the short-term, breaking below Friday’s low can bring weakness to the stock market. I will use it as a sell signal and manage accounts accordingly.

Wishing you a great week!

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