The December euro lost 1.16 on volume of 332,243 contracts. Volume was approximately 62,000 contracts above its average daily volume year to date. Open interest increased by 11,280 contracts, which is 40% above average. New shorts entering the market were clearly in control, and they entered the market in fairly large numbers. This is bearish. On December 7, the December euro has made a low of 1.2877, which is 4 ticks under 1.2881, the low of November 28. The euro will not generate a short, or intermediate term sell signal on December 7. For a short-term sell signal to be generated, the high of the day must be below 1.2888. Since the average true range is 89 points, this would imply a low of at least 1.2799. If this were to occur, it would be the lowest price for the euro since November 21.
If clients are inclined to enter the market today, they should wait until the end of the session and place a stop under the low of the day. Alternatively, wait until Monday when the final open interest numbers are in, and see if the euro retests the low of December 7. In either scenario, if the euro can’t hold the December 7 low, the trade should be exited, or not taken at all.