GBP Futures: Participation jumps on big breakout

Source: CME

GBP/USD spot ended higher at 1.3101 on Friday; its first end of the day close above the key level since September 16, 2016. The big break higher was accompanied by a jump in Open Interest by 10,952 contracts, shows the preliminary data published by the CME.

Over the last week, the total OI went from 192,714 contracts to 205,030 contracts. Clearly, the total weekly rise in the OI is more or less the product of Friday’s surge in the OI.

OI adds credence to bullish technicals

GBP/USD Daily chart

  • This goes well with the fact that GBP/USD not only closed above 1.31, but also witnessed an inverse head and shoulders breakout and bullish outside week candle.
  • The OI activity, thus suggests the spot could resistance at 1.3113 - offered by the trend line sloping downwards from Aug 2015 high and May 2016 high.

JPY futures: OI activity signals bullish exhaustion

The Dollar-Yen spot fell from 113.58 to 112.25 on Friday following the release of a dismal US data. On the technical charts, the currency pair suffered a head and shoulders breakdown, suggesting the rally form the low of 108.80 (June 14 low) has ended…

However, activity in the futures market points to exhaustion in the JPY rally. The Open Interest (OI) in the JPY futures fell by 2730 contracts on Friday, despite the big sell-off.

Over the last week, the total OI increased from 232,273 to 251,974. Additions to OI were seen from Monday through Thursday, which indicates a high degree of participation in the pair’s retreat from 114.49 to 112.25. Friday’s drop in the OI could be more due to withdrawal of liquidity/profit taking ahead of the weekend.

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