EUR/USD Analysis: Call OI jumps, is bearish reversal a bear trap?
|The bearish reversal on the EUR/USD could be short-lived if we take into account the rise in the open positions in the EUR bullish bets in the options market.
As of writing, the EUR/USD pair is trading 0.23 percent higher at 1.1867. The technical charts seem to favor a downside in the pair.
Daily chart
The above chart shows-
- Bearish pin bar reversal - Monday's pin bar candle followed by a negative close on Tuesday below Friday's low of 1.1837. It indicates the spot may have found a temporary top 1.1961 (Monday's high) and could revisit the 50-day MA level seen today at 1.1758.
However, the details of the activity in the EUR/USD Dec. expiry options for Monday show investors continue to be bullish on the common currency.
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 74,446 | 637 | 27,040 | -23 | 47,406 | 660 |
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 86,170 | -20 | 7,213 | -54 | 78,957 | 34 |
- The open interest in calls increased by 637 contracts yesterday, while the open interest in puts fell by 20 contracts. Clearly, investors are expecting the EUR to rally in the short-run.
- Also, max additions were seen in 1.20 call and 1.19 call.
View
- The bearish pin bar reversal is more likely to be a 'bear trap'.
- The options activity indicates the spot could revisit 1.20 levels sooner than later.
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