COT Report Analysis - a thread on market sentiment

Hi everyone (especially Mike and rookie),

I start now a new series here, as you guys are busy with your own analysis and work, I thought I write here down my own thoughts about my first COT book as I read it. I write down anyway always for myself what I think is important to look it back later, so I decided why not to post it here. Important: I write down the own words of the author, in the right order as it comes in the book. However I will not structure the different thoughts and do not write down which pages they were. I just want to mention the sentences which I find important for myself. This is not the same value for you as reading the book (hopefully you will all read it when you have the time for it), however it is better than nothing. I also make my own summary in the end of each post.

“Watching the COT report, you can see when the trade forms a consensus that prices have moved too far away from fundamental values, or find out when the hedge funds have all piled into one side of the market and are about to have their hat handed to them.”

“If large non-commercials are overwhelmingly long, look for a long trade: look to go short if large speculators are net short. He (Larry William) specifically warned against using the Commitments report for trade timing.”

Spreading in the report: “the spreading figure represents the extent to which each large speculator holds equal long and short positions. Any excess is listed as either short or long, as appropriate.”

Percentages in the report: “The drawback to using these percentages is that teh spreading total is included in the calculations. In other words, the long percentages across a row will sum to 100 percent less the spreading percentage.”

Summary: the first part of the book was about the history of the COT report. I like history, but I do not write too much about it here, as it is for our goal not the most important thing. Then there was a page from the COT report and explained what the different numbers mean. From this part I took out the definition of the spread and percentages.

The last part of very interesting though, and we never talked about it! It is basically about the different forms of reports. Here in babypips.com they suggest to use the 1. Futures Only, 2. Chicago Mercantile, 3. Short-form report. Somehow I never thought about that it is even possible to use any other kind of the COT report (as I use this version).

This means we share here weekly our findings and it might even be the findings of 3 different reports!!! Briese writes that the actual numbers are very similar in the Futures Only and Futures-and-Options Combined report, still it is important to know which one to use. He uses for example in his entire book the Futures-and-Options report (not the same as what I use). I am very interested now if he uses the long or short form and if he uses the Chicago or New York version. He did not tell the last two “settings” yet. But for sure it would be good to know what all of you use out there!

Have a nice day!

Hey guys.

Wow. What a day yesterday has been. Well, here goes.

      USD: strongest 
      EUR: 
      GBP: 
      NZD, CHF: 
      CAD: 
      AUD: 
      JPY: weakest 

Majors: +7 over comms.

As I tallied up them, there are definitely some things to mention. Interesting stuff!

So, we all know the USD was tearing everyone up. BUT…I noticed some correlations, across the board.
The EUR went real high also. GBP was high. JPY lost against everyone. Comms took the back seat.
So when we have the USD riding high, the opposite will be the JPY on the other side. Their both majors.
Broadly speaking, it will be a tug of war with the majors against the comm dolls, all except JPY.
So, that got me thinking. This entire year has been real bad for the USD. And that seems to be a big factor of WHY the comms have been doing so well this year. (sure seems that way) Also the EUR has been pretty weak this year(deflationary issues). So, it seems that if the majors are not strong the balance will tip towards the comm dolls. And now we have USD flexing their muscle, and the EUR tails close behind. And they are not strong because of their own reasons. So, I think it’s important to think of the different tugs of war going on here. It’s not only how the one economy is doing internally, but the reasons for the shift of money going on.
And that got me to thinking of the trend thing. Yes, I made a lot on the USD, but also lost a lot on the EUR, CHF, JPY, AUD. I guess I have to step back and be more smart on choosing which trend to be in on. And also to be careful when broad trend changes are taking place. So, I need to first look at who’s trending mostly, the majors or comms. And then what effect does the top dog have in their own camp. When the GBP was the strongest (early this year), the EUR was not riding on their coat tails. The point is there are correlations (all over the place) that need to be understood. By me.
It’s all about living and learning.

So, it seems like the majors (fronted by the USD) are turning the tide against the comm dolls. The trending high trends are lining up with the majors now. And I just hope it will continue. (which makes things easier). It would seem like the more you know about which ones have an effect on the others, that will lead to having SOME kind of edge in the market.

Got to run.

Mike

Hi Mike,

interesting opinion. Have to think about it.

Still discuss then your view on CAD. We are all bullish on it but your last writing shows more bearish forecast on it. USD is also interesting. I read on the Babypips website and on some other websites that the USD rally might not hold on. Tehre are signs of economic development however interest rate forecasts do not change at all. So the great news do not get any help from the politicians.

I will read your forecast on the comdolls and what you think about their long term trends!

Hey guys.

Yesterday. NZD: strongest
JPY :
CAD, USD, CHF: tied
EUR:
GBP:
AUD:

Split: Majors and Comms even. (+0)
So we had a correction. The week so far looks like this.
Monday: C +3
Tuesday: M +11
Wed: M +7
Thurs: Even +0

Majors are on top at +15. That’s quite a bit. It sure does look like the majors are moving up against comm dolls. Monday the comms took it but just by a little, and that’s all they got. Today is the big day. I think it’s looking like a trend change, going up for the majors. It just seems like it, that’s all.
So it will look like this…either majors really come out on top, because of USD, or the comms come back some to break it all even. It would seem like a big feat if the comms can come back from being down 15 going into the last day.
Well, then again, GBP had bad news this morning. EUR sort of the same. And worthy to note is the AUD didn’t do too well either. NZD has been climbing lately towards the end of the week.
Well, I just hope the seesaw tilts all one way. That would be USD continuing their strong course upward.
BTW… I am having a really bad trading week. So, today, I’m counting on the USD for up. It’s been the trend. Why not? Controls in place. We’ll see.

Let the games begin.

Mike

Hi Mike,

I expect at the moment more comdoll loss. The stock markets are down huge today. The move is very risk off sentiment. That does not help the comdolls for sure. However we will see the big moves soon. I think now it is important how long the very bad international attitude is. Until stocks are falling like stone I do not see too much chance for comdolls. And of course USD can increase further on. Especially with good NFP report. If it is bad, like I said, I will be in the reversal play.

Good luck!

[I]I continue now a new series here, I thought I write here down my own thoughts about my first COT book as I read it. I write down anyway always for myself what I think is important to look it back later, so I decided why not to post it here. Important: I write down the own words of the author, in the right order as it comes in the book. However I will not structure the different thoughts and do not write down which pages they were. I just want to mention the sentences which I find important for myself. This is not the same value for you as reading the book (hopefully you will all read it when you have the time for it), however it is better than nothing. I also make my own summary in the end of each post.[/I]

About the [B]short form of the COT report[/B]: “there was a time in my career when I relished discovering a complex solution, especially to a simple problem. The less I understood it, the more enamored I was. No more. Give me the short form.”

[B]Commercial hedgers[/B]: “traditional commercials (hedgers) can generally be expected to hold an informational advantage over other players. These firms have long-standing relationships within, and an understanding of their industry, bred of decades or centuries of dealing in the cash business. Although you need to be mindful of the commercial trading edge, it is essential to appreciate that commercial shorts and commercial longs are not (usually) the same entities, nor do they share the same hedging goals. By definition, commercials must demonstrate that they are hedging goals. By definition, commercials must demonstrate that they are hedging a legitimate risk and means that although they may play from either the short or long side, they cannot hedge in both. (A firm may be categorized as a hedger in some markets and noncommercial in other markets, however.) So, despite some shared trading edges, commercials are not a homogeneous group.”

[B]Large speculators[/B]: “the fund’s role is to assume price risk from commercials in exchange for a potential profit.”

[B]Small traders[/B]: “one of the potential pitfalls in labeling the small trader category as a good fade is that it is even a more diverse group than the large hedger group. It includes commercials of both stripes, producers and users, as well as speculators. Small trader then, are a mixed bag, whose trading tendencies are difficult to generalize.”

[I]Summary:[/I] as you see in this part of the book the author discussed the short form of the report and then introduced the different players of the market (he calls them players). I chose 1-2 sentences from each group, not always the definition but what I found good and important to know and share with you.

[B]
COT Report 01.08.2014.[/B]

So, let’s see what the COT Report tells us this week. Very important that the percentile factors will always show the non-commercial speculators:

[B]AUD[/B]: 69.98% vs. 68.37% previous. There was actually no change as open interest in both sides was reduced with the same amount and therefore the ratio of longs increased. For AUD the current risk off sentiment is definitely no support. I do not have any AUD long trades anymore.

[B]CAD[/B]: 62.57% vs. 59.93% previous. This is very interesting. CAD lost quite a lot last week (just like other commodity currencies) but the long positions were still increasing. The CAD goes in these times only with the market flow and sentiment as opposing to other economies CAD brings almost no economic data out. This tendency will continue until next Wednesday when we will see CAD Trade Balance.

[B]CHF[/B]: 29.78% vs. 36.16%. Just like the EUR, CHF is losing ground as well, however it is a safe haven and the strength of the last days is not included in the report. The 7% change to the short side is still a very big movement.

[B]GBP[/B]: 59.89% vs. 61.84% previous. Well if we can believe the saying to “fade small speculators” then it is a great time to go short with GBP. The postponing of rate hike expectations and weak economic data is not helping the GBP which suffered some great losses. The question is if we only see a correction for the currency or a complete reversal?

[B]NZD[/B]: 74.02% vs. 70.49%. Just like it was with the AUD, this result is also tricky as actually both short and long positions fell with approximately the same number which makes the proportion of longs higher. NZD took huge losses 2nd week in a row. First the rate hike disappointment and then the fall of diary prices. I see in many places that it is only a correction and NZD will rebound. I am not so sure about that.

[B]EUR[/B]: 25.57% vs. 28.34% previous. The result is not surprising, when looking at the charts we shouldn’t forget though that EUR got strength the last day. This is the currency where I do not understand what just happened on Friday. Why did it get stronger? So much promising changes in politics or economics are not to be seen for me. Well, it might be short-term strength only.

[B]JPY[/B]: 8.82% vs. 15.38% previous. Where are we heading if not to a COT extreme? Since I follow the report I have never seen a value under 10% so this is very interesting to follow for me. I am interested how down the value will be going. I will watch out for some long possibilities, but first I have to get some positive Japanese fundamentals.

[B]USD[/B]: the USD Index is going in the air! Besides no information on rate hikes there is not too much to worry about at this moment. Until stocks are heading down, risk off sentiment is on, there are conflicts in the world and good US economic data comes out, the Greenback will most likely continue its’ rally. This week gave us plenty of options to ride with the Greenback. The first smaller hit for USD was Friday afternoon, we will see how the story on Monday will go on.

That is what the COT report told me this week, I am waiting for your analysis too so tomorrow night we will have all the perspectives together and plans for the next week.

On GBP, the commercials (banks) are continuing to dump their short positions in the futures market. My feeling is that these hedged positions represent their risk in the spot and therefore if exiting hedged shorts in futures then they must likewise have exited longs in spot.

Another clue was the slightly poorer manufacturing numbers and reaction of price. A few months ago we saw something similar, but the very next day the market shrugged off poorer mfctr numbers for UK as being unimportant (after all the UK is not a major player in world Manufacturing) - not so yesterday - there was zero GBP support (bank buying) for the pound, yet many expected it.

I know of one very successful trader (not me :)) who continued to buy GBP yesterday assuming that the usual bounce would occur, he was probably heartened to see the bounce in the correlated Fibre, Cable didn’t want to know.

Last weeks report was the reason I said that it was an outlook changer for me and probably the only reason that I too wasn’t on the buy the bounce trail.

Is it a complete reversal or a just a correction? - these days I seldom think in those terms, I have learned not to have a bias, I just have an outlook - I find for me that my bias would always get in the way - caused me to try and be right in accordance with my bias.

Now I just go with the flow :slight_smile:

Hey FE.

I just poked my head in now. Thanks for the report! Good stuff.
I just wanted to say one thing…now.
Lots of interesting things, but, with the EUR your talking about. I think, like I said a little bit earlier, that the reason why they have been going up the last day was because of their relationship with the USD. I really believe there’s a correlation going on. And it’s not just due to the USD going up, but also in respects to the comms weak and risk on/off factor also. We know it isn’t because of them by themselves. How about this…EUR/USD went down (data factor on fri.), meaning EUR went up and therefore affected all the other pairs similarly (EUR up).
Look, I don’t know. Really. BUT, I do think that due to the nature of 2 currencies being paired, that there’s a correlating factor going on. And who knows exactly what ALL that entails.
I do agree with you that it should be short term only. (kind of reminds me of the JPY).

Well, this is another point to remember. I should start writing down these correlation truths. Cause we all know that history repeats itself. Also humans are creatures of habit. So, what will I write down? Maybe when the USD gets weak, how does the EUR react? UP.

So, I guess my whole point is what factors makes currencies move. It’s not always strength or weakness (within the economy). But a correlating factor within everyone on the board, in itself. Cause we need to remember that it is sometimes the money movement, preferred pick, more than a purposeful aim (with their money). SOMETIMES.

Mike

Hey guys!

Here’s the update of COT non commercials report as of 29 July 2014

[B]AUD[/B]

Net position: 39,606 (+813)
Open interest: 106,836 (-)

Buyers have added onto their longs last week as we see an increase of 813 to 39,606 from 38,703 while open interest has decreased slightly. Aussie dollar still looks strong with majority holding long.

[B]CAD[/B]

Net position: 22,691 (+2110)
Open interest: 122,619 (-)

Like I mentioned in my previous post buyers have been adding on to their longs progressively since 1 of July when CAD net position readings took a reversal from minus to positive readings. Last week buyers have added on their longs once again with some drop in open interest. While we have been seeing a nice steady increase in net position crude oil price is stuck between $97-105 trading range a major support area. US domestic oil production hit 25 year high in addition to that Iraq and Libya’s oil production doubled pushing oil prices further down. On the other spectrum the dollar index is trading near major resistance that if it breaks out there might be a further decline in crude oil in turn will affect the value of CAD.

[B]NZD[/B]

Net position: 15,289 (+157)
Open interest: 30,531 (-)

There was a small increase in net position from 15,132 to 15,289 with decrease in open interest. The lowest net position reading was on 17 June 2014 at 3,733 since Sep 2014. Since then the kiwi has been climbing up higher at a steady rate. Compared to its other peers /comms/ NZD has been enjoying a positive readings for most of the weeks for the last year with only 4 weeks of negative readings. But with declining dairy price /demand/ and overproduction will NZD be able to hold up its value and enjoy net positive readings any longer against other currencies ?

[B]EUR[/B]

Net position: -108,075 (+19,252)
Open interest: 356,865 (+)

EUR net shorts have increased quite a bit again from -88,823 to -108,075 as longs in % declines.

[B]GBP[/B]

Net position: 24,910 (-2587)
Open interest: 237,411 (-)

[B]JPY[/B]

Net position: -73,069 (+19,153)
Open interest: 172,210 (+)

JPY net longs in % has dropped down to 8.82% while net position has increased further more from -53,916 to -73,069. The highest net position readings was in Dec 2013 at -143,822. As I have mentioned JPY has always had a minus readings mostly within around 50,000-80,000 range.

[B]CHF[/B]

Net position: -11,764 (+4384)
Open interest: 44,022

I’m looking to take long term trades with short EUR/AUD, EUR/JPY and EURGBP as they seem to be trending. I was also eyeing on CAD/CHF and EUR/CAD but the trend seems to have been broken my technicals tells me so and when I look at the charts. Both of my short term long/short trades have been closed SL triggered. So I’ve crossed CAD/CHF and EUR/CAD out.

But I’ll also be paying close attention to US dollar index as they are nearing key resistance. If there’s a break out and an uptrend starts my outlook on commodity currencies might change to bearish that includes CAD as well. Until then I’ll short EUR as they seem to be the weakest of all but only if my technicals align with my bias. I’ll keep you guys updated!!

Hey Mike!

It will take some time to figure things out, the correlation. And like you said it should give an edge as you start to choose high probability trend trades.

Just for an idea correct me if I’m wrong, we’ve all heard how USD is negatively correlated with plenty of commodities like gold, natural gas and oil while these commodity prices surge higher USD drops and vice versa. AUD, CAD and NZD are somewhat dependent on commodity prices as commodity exports constitute a significant part of their economies. If I’m still on the right track then it makes sense that their moves are somewhat similar as they are dependent on commodity prices. I was trading AUDUSD and NZDUSD for a while and I can tell you that their moves have been pretty similar to each other against dollar at least.

Its all going back to the flow of things again. If its not the major it still is a contributing factor I think behind the flow of things major v comms.

PS: I just read an article that gold price rises on tensions in ukraine and gaza what will happen to USD then ?

Hi peterma!

Great to read your thinking. I always look what the top traders in Zulutrade do. Well, the number 1 has the same problem who has the same problem at the moment as your “good trader” friend. He was buying the whole time GBP/USD and the bounces just are not coming!

I do not know if you actaully read our posts or not, I wrote something similar a couple of days ago for the USD. My trade plan was for a weak NFP report to trade the bounce as I have a bullish bias. I traded it but until now it did not work. I am not worried until now, but I was suprised as the USD did not erase the losses within a couple of hours.

Regarding the GBP I think the same as you, also had some good GBP short trades. If you like, we can call it an outlook and not bias, so I have a bearish outlook for GBP at the moment. It is good to read you have the same because I read everywhere and see that people only think it is a correction but the reaction for the GBP news are not normal. So we will see probably in a couple of weeks if it is a reversal.

Which report do you mean exactly to be a game changer for you? And sorry for not understanding, but I do not know what you mean with “Fibre”. What does that mean?

The Bible is great, I share my thoughts on it daily. Today I read exactly the part that you actually shared in the forum already. Do you read it again? Any other surprises in the new COT report for you?

Wow Mike,

this post made me crazy :slight_smile: It was complicated for me. Hmmm it is logical if USD is weak EUR goes up. However if you look at the reaction for the NFP report, USD was weakening the whole board, but it found a resistance level but vs. the EUR it was weakening further on!

If it was vs. JPY or CHF then I would say it is a safe haven thing in these days. But the EUR… Just do not get it.

It is funny guys that all 4 of us are posting in the same time on a Saturday! :slight_smile:

Hi rookie,

great stuff with net positions. I am reading great examples in the book about net positions. It seems like that it will bring us more than my percentile comparison. Although our results and suggestions are the same, for historical comparison and finding the turning points it is better to use net positions vs. percentile comparison.

Can you make an extel table about it? It would be great to have an excel table where we have the non-commercial net change and the price action to it. That helps a lot. You know what? I will check it on the net. I have saved alread some links. This might be good: Forex COT | Commitments of Traders Report | COT FX | OANDA fxTrade Canada

The correlations are also great, especially good that you are looking for Oil prices for Canada. You made me a bit uncertain about CAD.

Regarding to NZD I am very bearish now.

For your trade setups. I do not want to influence you, only my thoughts:
EUR/AUD: I dont know
EUR/JPY: agree
EUR/GBP: I think they are both bearish. Maybe I am even more bearish on GBP. The only setup that I find dangerous.
CAD/CHF and EUR/CAD: sad story, especially because exactly the same happened to me :slight_smile:

According to short bias, I am very bearish on NZD and GBP at the moment and EUR has bronze medal only :slight_smile: Read also what peterma wrote, might be helpful before you take the trade.

[I]I continue now a new series here, I write here down my own thoughts about my first COT book as I read it. I write down anyway always for myself what I think is important to look it back later, so I decided why not to post it here. Important: I write down the own words of the author, in the right order as it comes in the book. However I will not structure the different thoughts and do not write down which pages they were. I just want to mention the sentences which I find important for myself. This is not the same value for you as reading the book (hopefully you will all read it when you have the time for it), however it is better than nothing. I also make my own summary in the end of each post.[/I]

This review has many information what peterma already mentioned in comment number 139: 301 Moved Permanently

[B]Fading Small Speculators and Other Half-Baked Schemes[/B]:

[I]Tip: Always follow commercials.[/I]
For most of us, better results will accrue from buying at the moment commercials quit buying (or moving short just as commercials stop selling). It is rare to see commercials stop buying before prices find a bottom, or to see them quit selling ahead of a top. I use the term “commercial capitulation” to describe these rare events, which are the only occasion when it is safe to buy while commercials are still buying.

[I]Tip: Net long is bullish, net short bearish.[/I]
Large speculators: their market activities are purely profit motivated, so if they are holding more short than long positions in net, you could say that as a group, the funds are bearish.

[I]Tip: Always fade the small speculators.[/I]
The includes small commercial hedgers as well as small speculators - a critical, frequently overlooked nuance. The presence of commercial hedgers makes categorizing problematic.

[I]Tip: It is only logical to compare hedging to the seasonal average.[/I]
I grant you that it may be logical to assume that commercial producers and users, at least in agricultural markets, have hedging requirements that might change with the seasons. Seasoned charts are easily assembled from weekly COT data; just sum the net positions by week and divide by the number of years.

[I]Tip: the COT is old news by the time it is related.[/I]
You will come to appreciate that analyzing COT data in anticipation of gaining a trading edge is an attainable goal, but one that requires paying due attention to the details, and particularly to the nuances.

[B]Net Positions [/B]
The Commitments of Traders reports are devoted exclusively to the domain of open interest. There is no price or volume data contained in the COT reports.

[I]Open interest:[/I] open interest is the total number of open contracts at the close of trading.
The most common format used to visualize the Commitments data for analysis is a net position chart. Important are the comparative levels and patterns visible, particularly hen net trader positions are compared to price actions.

[I]Large speculator patterns[/I]: the weakness in the funds’ approach is that they typically are caught holding their largest position - in the wrong direction - at market turns.
The large speculator group reveals a strong pattern of trend-following trading style. This is the group that fuels trending moves.

[I]Commercial patterns:[/I] unlike funds, commercials are usually positioned to profit at a trend change. It is rare to detect commercials running out of buying (or selling) capacity, no matter how far prices may move against them.
Funds buying and selling fuels uptrends and downtrends, respectively, while commercials buying halts downtrends and commercial selling caps price rallies.

[I]Small trader patterns:[/I] the variability in trading patterns makes the small trader category the least reliable in terms of market timing.
In general, the small size of their market share and the unevenness in trading patterns keep them from being reliable trend indicator (or consistent counter-trend indicator, for that matter).

[I]Summary[/I]: this was the most interesting part of the book until now, and Mr. Briese writes that the chapter on Net positions is the most important. Much more I cannot write about it as there are many graphs and examples. Only because this one chapter I think it already worth it to read this book. What is interesting for me though that I do not always find that the “5 Tips” Briese wrote, he really follows it too. For example he wrote to follow the commercials but it is not really the case what he does as I read the book. Or probably it is the case but it does not make that impression. “Net long bullish, net long bearish.” - well this might be true as well, but net long who and net short who? :slight_smile: Quite important to know of course.

Hey FE!

How about this, I’ll analyze the commercials and you’ll keep doing what you’ve been doing that is to analyze the non commercials but add net position , open interest and price action on top of percentage changes.

I think it makes sense to shift things this way as we were working on pretty much same the thing instead if we look at things from non commercials and commercials point of view we might be able to better understand their relation. Thus hopefully gain some edge over the market. Like Mike mentioned in his earlier post I agree that both are important and we shouldn’t neglect one or the other.

I was reading your post ‘the bible’ and I came across this tip : always follow the commercials. That got me thinking look at NZD non commercials net position for past two weeks and % changes and CAD as well. If we were to purely establish our bias based on non commercials that doesn’t seem to be working all too well.

And then there’s correlation Mike’s part , I thought about adding commodity prices. I have been reading and looking at charts and there seems to be correlation. Though it can’t be perfectly correlated all the time it should give us some edge. AUD and NZD moves are positively correlated at least against the dollar from what I’ve observed. China being their biggest trade partner and Australia for New Zealand might be one reason. And both CAD, AUD and NZD is vulnerable to changes in energy commodity prices especially CAD and AUD.

On the other hand USD is inversely correlated with energy commodities and gold. That’s all I’ve gathered and I thought putting all this in should help us understand the flow of things better. I have no idea where EUR and GBP other majors stand in this.

USD is running high and EUR has strengthened and I’m unsure to go long with AUD or any other commodity currencies as both energy and agriculture commodity prices are down. But regardless I have my fibs on EURAUD EURJPY and EURGBP charts. So far they’re all heading up no sign to be coming back to fibs retracements areas. So I’ve still got time to think.

Hopefully we’ll get this!

COT commercials data as of 29 July 2014

[B]AUD[/B]

Net position: -45,930 decreased from -47,080 by 1150
Open interest: 106,836

Long & Short in %
Long: 13.78 from 10.98
Short: 86.22 from 89

[B]CAD[/B]

Net position: -26,875 increased from -26,406 by 406
Open interest: 122,619

Long & Shorts in %
Long: 35.71 from 35.74
Short: 64.29 from 64.36

[B]NZD[/B]

Net position: -16,555 increased from -15,877 by 678
Open interest: 30,531

Long & Shorts %
Long: 12.91 from 12.26
Short: 87.09 from 87.74

[B]EUR[/B]

Net position: 155,583 increased from 130,995 by 24,588
Open interest: 356,865

Long & Shorts in %
Long: 71.94 from 68.77
Short: 28.09 from 31.23

[B]GBP[/B]

Net position: -37,541 decreased from -44,886 by 7345
Open interest: 237,411

Long & Short in %
Long: 43.37 from 42.58
Short: 56.53 from 57.42

[B]JPY[/B]

Net position: 98,799 increased from 73,136 by 25,663
Open interest: 172,210

Long & Shorts in %
Long: 76.03 from 70.22
Short: 23.97 from 29.78

[B]CHF[/B]

Net position: 22,874 increased from 15,450 by 7424
Open interest: 44,022

Long & Shorts in %
Long: 90.33 from 87.31
Short: 9.67 from 12.69

What a contrast! Majority of commercials are short on AUD, CAD and NZD and long on EUR,CHF and JPY while there seems to be some indecision on GBP. I’ve also wanted to see how much % does commercials net position take up in total open interest. Thought that would give more accurate data than long and shorts %. But I think I’m calculating it wrong. Any ideas ? maybe we can compare net positions held by commercials v non commercials. That would show who holds more power over the other and we can sail to that direction. What do you think guys ?

Hi rookie,

ok lets do that with new reporting distribution!

About NZD. I am actually bearish on NZD exactly based on what I read in the Bible. I hope I understand the thing good. I looked at the NZD chart at Forex COT | Commitments of Traders Report | COT FX | OANDA fxTrade Canada and it tells me that Non-commercials hold their amount of long positions (actually even raised it a bit) but price was still falling. In my interpretation this means that they are not able to hold the price up. Of course there net position is not an extreme level (that would be about 20 000) but price still decreased without decreasing the net positions.

The CAD is the same story. However I did not find that out about the CAD. Great indicator! I might close the remaining CAD positions!

Correlations can give a huge edge I agree. China is something we have to look for. Oil price too. However if I add always new correlations then I am afraid to finish in chaos and will not understand anything. I think we progress fast (which is good) but maybe too fast (which might be bad). I try to be a master what we do now and later on add new stuff to it, like more correlation. I say that despite the fact that I am reading every day hours of fundamental news.

I cannot answer for example to your gold question. In times of fear gold should go up I think however as USD is also a safe haven, the question is good.

I also do not go long with any commodities next week. Important point from you. I am still worried about your EUR/GBP short but I wish good luck to you with it.

I think the last weeks I made the mistake that I wanted to understand too many things and paired many possible cross currencies. I should have chosen a lot less and would have been able to manage my trades better. I try to have a lot less pairs next week and see what it brings if I fully concentrate on those couple of pairs. Until night I think about the setups and post it so we can compare them.

Hi rookie,

I am not sure if comparing that commercials and non-commercials net position brings something for us. At the end they have to be a zero sum with the small speculators. I did not read until now anything anywhere about that. I only see that analysts concentrate on the amount of net positions and what their chart pattern shows. We have not looked at chart patterns at all, I do it from now on. For that reason is important to understand net positions. But comparison… hmmm I do not know about that one.

I think your calculation were right!

Hey guys.

I’ll paint what I know.

Weekly shake out. USD: strongest
EUR:
CHF:
JPY :
NZD:
CAD:
GBP:
AUD: weakest

Majors took it : +20
That’s 2 weeks in a row. Momentum gaining.

Well, there has definitely been some trend changes this week. (not good for me)
I’ll give you a before and after, for the week.
LONG TERM: (strength by trending, over a longer period, months out)
Beginning-------------Ending
1. CAD----------------USD 1.
2. GBP----------------AUD 2.
3. AUD----------------CAD 3.
4. JPY-----------------GBP 4.
5. USD----------------JPY 5.
6. NZD----------------NZD 6.
7. CHF----------------EUR 7.
8. EUR----------------CHF 8.

SHORT TERM: (strength by trending, over a shorter period, weeks out)

          1. JPY-----------------USD 1.
          2. AUD----------------JPY   2.
          3. USD----------------AUD  3.
          4. GBP----------------EUR   4.
          5. CAD----------------CHF   5.
          6. CHF-----------------GBP  6. 
          7. EUR-----------------NZD  7.
          8. NZD----------------CAD   8. 

So, what happened last week. (l means tied) (similar’s match)
Monday:

         AUD l 
         CAD l  
         EUR ll             
         CHF ll                
         GBP              
         USD                
         NZD                  
         JPY    

Tuesday:

            USD 
            EUR  l 
            GBP  l 
            AUD  ll 
            JPY   ll  
            CHF 
            NZD lll 
            CAD lll 

Wednesday:

            USD 
            EUR 
             GBP 
             NZD l 
             CHF  l 
             CAD 
             AUD 
             JPY   

Thursday:

             NZD 
             JPY 
             CAD l 
             USD l 
             CHF l 
             EUR 
             GBP 
             AUD 

Friday:

        JPY l 
        CHF l 
        EUR 
        AUD 
        USD ll  
        CAD ll 
        NZD ll
        GBP 

So, we got 2 of the 3 comms taking the first day. Then the USD started its roll on up, beginning on tues early. They ended strong through wed. They then corrected on thurs., which then the NZD came on back. Actually look at their progress, up to that point. Also to note is the AUD. Look at their progress. Was the opposite of NZD. Ok, then came friday, and everyone knows what news came out. But did anyone know who took it? Interesting how the JPY and CHF tied it up for the strongest that day. Well, I guess if you can’t run to the USD, then there’s your next best thing. Safe haven. Also to note is how the EUR was up on the heals to the USD, as we have been mentioning.

So this week. After just now looking at what’s on the docket, looks like much news coming out for the comms. Wow. Just had to take another look. This is gonna get interesting. The comm dolls are going to be in the spot light. For all 3 of them! So, this is what we have. Majors taking over the market lately and seemingly gaining traction. But, with a let down on fri. (sentimentally speaking), I just wonder if the market is going to turn it’s head back towards the comm dolls. Look, you have to agree with me on the point that the market was setting up for something big to happen to the USD on fri. Even 2 weeks out! But, it just didn’t come to fruition. So, now what? Who’s gonna be the target for their money? Majors…Comms…Safe Haven…I’m thinking it will go back to the comm dolls. They have had a good trend (broadly speaking) going this year so far. A few corrections, sure. Has to happen, but nothing lasting, so far. And on the other side of it is the USD strong enough for money to be parked there, for awhile? There was a lot of excitement coming for USD, but it seems like they lost their sail…from what was expected anyway.

Well, I personally have to make some adjustments on my trading plan. I do know that I’m not going to trade on the short term of things. And I’m not going to keep track of the 8hr trending figures. It’s just too much work. And on the long term side of it things have changed! You know, at the start of the week there was 11 pairs trending long term (in my estimations). And now there is only 2. EUR/USD and USD/CHF. GBP dropped 3 pairs trending long term.
AUD dropped 2 pairs.
EUR and CHF strengthened much and took out 8 pairs. (overlap)
JPY weakened (what can I say, they trended against EUR, CHF)
So, yep, I got burnt this week. Hey, at least I can say, “if it’s trending I’m in it”. With the 2 going still anyway.
Sorry I don’t have much of an analysis this week. I will be leaning on your guys’ info. And what good stuff from both of you!!

Mike