COT Report Analysis - a thread on market sentiment

The website has been updated guys dairy price index fell to 875 from 880 -0.6% change from previous readings that came out on Aug 5. I noticed that average winning price decreased to $3,000 from 3,200 something from last time 5 Aug.

It’s going to be a rather slow downward move if its going to keep on dropping kiwi.

Thanks man!!
Appreciate the info!

I’m on the ride down.

Hi Team,

rookie,
thanks for the prices, great! We have to see though that the last falls were a lot more significant than this time in dairy prices. And I do not know anything about dairy products but I assume prices can not fall 10% monthly until eternity. So we have to watch out for that one. Still, until it falls it is bearish for the NZD economy that is for sure.

peterma,
great point, there was no reversal for USD basically, it was falling and falling. We shouldn’t be greedy and have tight stop losses. I anticipate a bigger reversal as the wins were coming basically continually for USD and there has to be a stop. It would be great if sometimes you can post your thoughts when your indicators give you the reversal signal.

And to everyone,

looking at the posts today, it was a good teamwork and great running for everyone! I do think we all had a great day! We have to manage the trades and do not get greedy. I share you my best winning strategy from the last weeks! Here is the secret: [I]I make the most money during sleeping or when I am not at home.[/I] I just set my targets, do not look at computer and close the trades too early. Just let it run and when I get home I like to see the green colors. Hopefully it will work further on.

[I]Keep up the hard but good working guys. I think we all have learned and it was proved today, look at every currency itself not the pairs, and when we understand the story, then find the right pair and grab the pips.[/I]

Good luck for every one of you out there!

PS: Mike, looking at the charts I will not be surprised on your list tomorrow. Let me guss: 1. USD :slight_smile: However who knows what happens until your market close time!

Yes FE! Very well put! (look at the currencies themselves more than the pair)

Let’s stay smart.

Mike

Edit—I meant to say “lets be smart about it”.
Big brother is watching…(Peter)

Hey guys…

FE you’re right though the reading came out lower than previous it wasn’t as bad as last time which dropped by some -8.6% still it’s a bearish reading. I’m out already with +25pips not much but I had to be cautious like I was saying the bears might already have betted down NZ against US earlier in the session even prior the outcome and Peterma noted that Dollar index was reaching a critical point resistance. On NZDUSD daily chart at around 0.8394 there’s major support level. Its going to take a lot of force it break it through. I think. Lets say it breaks. I think it will sometime in the future. There’s going to be a correction or reversals Dollar has enjoyed its ride and I agree with both of you Peterma and FE there might be some reversals coming in. I had to be out. You’re right FE can’t be too greedy in this game. I’ll sit aside and see what happens for now.

I missed RBA Stevens speech live but I’m reading it now on their website, I was thinking if it turns out to be rosy AUD might pick up some pips against USD but clearly it isn’t and I might have been late.

So for today we’ve got BOE minutes, rake hike cut or unchanged votes in the picture later in during the day. Some movements on GBP pairs will be the highlight of the trading day. I think. Which pairs are you looking to trade guys ? I haven’t decided yet. I have to think.

Thanks for the word of encouragement FE. We’ve come quite far. I like this way of monitoring our trades, progress.

PS: Haha Mike! Yeah we’ve got to be smart about it. Big brother is watching :smiley:

Here comes the numbers.

USD: +7 -0 0
AUD: +3 -1 3
EUR: +2 -1 4
CHF: +2 -1 4
JPY: +2 -1 4
NZD: +1 -2 4
CAD: +1 -5 1
GBP: +0 -7 0

So we have Majors +3. That’s the way I’ve been doing it.
Now I’ll give you the M/C cross count. This is one side against the other with no internal counting.

USD: +3 0 0 (against comms)
AUD: +1 -1 3 (against majors)
EUR: +1 -0 2 (against comms)
CHF: +1 -0 2 (against comms)
JPY: +1 -0 2 (against comms)
NZD: +1 -1 3 (against majors)
CAD: +1 -4 0 (against majors)
GBP: +0 -3 0 (against comms)

We have Majors added up = +6 and -3. Boiled down (6-3) = +3
We have Comms added up = +3 and -6. Boiled down (+3-6) = -3

So, that shakes out to Majors on top, by +3. It is the same, but, I think the “measuring stick” might be a little bit different. (I have to see what that will come out to be) That would be finding the extremes, for the gauge.

Any case, a +3 is not by a whole lot. So yesterday was Comms +4. Today Majors +3. Technically Comms up by 1. But, we’ll call it a foot race.

Ok guys. Bedtime. See ya in about 7 hrs from now.
Rookie, I’ll give you my trades then. But, I’m for the most part all in with USD.

Mike

I closed my usd/jpy trade from last week from last week for a profit of 88 pips. My net result for trades taken last week is 61 pips.

Hey guys…

If you’re still riding down on NZDUSD Mike ! I’m thinking I should stayed in a bit at least down to 0.8400 look out for FOMC minutes and and Jackson Hole if there’s a talk of rate hike I’m down with NZDUSD and AUDUSD again.

And here’s the summary of RBA Stevens speech in case if you haven’t read yet.

“The exchange rate, another channel through which monetary policy usually has an effect, is probably not doing as much as it might usually be expected to do in achieving balanced growth,” he said in his opening statement to a parliamentary committee Wednesday

Stevens said the currency intervention remained part of the central bank’s toolkit and it would not be appropriate to give advanced warning of such measures.

The economist added that the first rate hike is likely to be delayed until the third quarter of 2015.

The RBA has kept its interest rate unchanged at a record low 2.50 percent since August 2013. The Australian economy expanded at an annualized rate of 3.5 percent in the first quarter. Overall growth in the second quarter is expected to be somewhat softer.

The RBA cut its growth forecast in its latest quarterly Statement on Monetary Policy. Central bankers revised their 2014 growth outlook from 2.75 percent to 2.5 percent. Growth is expected to be between 2 percent and 3 percent next year, down from the previous estimate of 2.25 percent to 3.25 percent.

Bank of England Hikes UK Growth Forecast but Interest Rates Rise is No Closer

Bank of England Hikes UK Growth Forecast but Interest Rates Rise is No Closer

The Bank of England has increased sharply its growth forecast for the UK economy in 2014, but the timing of a hike in interest rates remains clouded.

Office for National Statistics (ONS) data shows that in the three months to June 2014, pay excluding bonuses rose by just 0.6% on average across the UK, the slowest pace on record. And price inflation is running at 1.9%, meaning a real terms decline in wages, though the Bank of England expects this to slow in the near term.

The Bank of England has said it will only start raising its record-low 0.5% base rate gradually when it thinks wages and productivity have started to rise significantly.

It is concerned that an early hike in interest rates could choke off consumer spending, a large part of the economic recovery, by forcing households to redirect more of their income towards debt repayments, such as mortgages.

RBS economist Ross Walker said the labour market data "weigh slightly in favour of the first Bank Rate hike coming ‘later’ (February 2015) rather than ‘sooner’ (November 2014).

If Fed raises its interest rate prior BOE does reading all these articles sure seems like it I’m not quite sure how far GBPUSD will drop down to :eek:. And we’ve seen how recent indicators have been for US and UK. US economy sure seems to be picking up.

I had this thought if FOMC minutes and Jackson hole reveal a hint of rate hike Dollar index might just break through that resistance. What do you guys think ?

RE: U.S. Fed seen moving slowly after first rate hike in second quarter 2015: Reuters poll - Chicago Tribune – “While the Fed would like a faster increase in wages, if all other indicators are showing sustained health in the labor market and substantive reductions in labor market slack, the FOMC would be hard put to find a reason not to hike rates,” said Terry Sheehan, economic analyst at Stone & McCarthy.

Good morning Rookie! Guys!

Wow. Looks like your doing some homework. I really really appreciate getting those 2 reports. I wish I had the time to do more reading on that stuff. And here you just hand it to me on a plate! Thank you!!

Well, yes, I am riding the USD. Against CHF, JPY, AUD, CAD, and most definitely NZD.
I am gearing up for a little bit of GBP scalping here shortly.
I guess my plan is just to hang in there with USD for a longer term. I mean just stick it out, even through dips. I don’t want to get stopped out by any stop losses, which for sure can come given the volitility of the news. Spikes. I did add some position size to NZD yesterday. Nothing on the others yet. If I do decide to put some stop losses, they will be quite large. That’s due to ride on USD for days and weeks ahead.

Well, I’m gonna do some reading now. And watch the GBP. Kind of looks bullish.

Mike

Hey Mike! its evening here :slight_smile:

Its my second time trading the news, I consider this trading the news anyways. So there was 2 votes for rate hike and the remaining 7 for unchanged. I was reading somewhere that specs were waiting for at least 1 vote for rate hike thus we saw an increase in COT non commercials net position /longs/ for GBP last tuesday.

I was late to enter went short with EURGBP , should have had a limit order. Didn’t realize it would that fast! Almost got a heart attack. Better have limit order for this high volatile news events. Man! Now I get it. I might have to take a loss on this one we’ll see hopefully I can get to NY open.

Hows your scalp going

RE: I just got stopped. That bearish candle was forming at a speed of light :o on EURGBP chart.

Man Rookie…sorry about your scalp trade.
I would love to share my good scalp, but only wish you had a good one.
I made out really good. Was in with GBP/CAD before it was time, 10 pips +, then it just shot up from there. I came out of that with 56 pips. 10k on it also.
I’m happy, but wanted to hear a good story from you!
So, a few minutes afterwards, I went back in with only a 1k size. It’s losing quite a bit. Just checked now, is trying to come back up. This might be a longer term trade for me. Cause I just think its at the bottom of the range. (remember my chart over the weekend?) It just won’t fall below this major support level!

Hang tough man!!

Mike

I’m glad you did well Mike!

I’m still learning to trade the news I’m kinda new to this not going to lie I was angry that my entry was late and I got stopped out at a pullback. But that was a good experience. At least I was on the right side, my entry was late. I’m learning lots so can’t complain.

I know the has just started where you are, well for me its about to end soon. Tomorrow’s a new trading day. We’ll see what Fed will have to say about rate hike. I’ll have to think hard which pair I want to go with.

I’m impressed that you’re still on with some pairs for a long term. I would like to do that myself. But as you see I’ve got some fears to overcome holding trades for a longer term. Hopefully I’ll get over my fear soon. I’m getting better at it. We all are improving quite a lot.

I’ll see you guys in the morning!
Good day.

I just re read your previous post that you’re riding the USD against JPY, CHF and com dolls for the longer term without any stop loss ?

That’s quite like MG. I’m still pondering if I should go about it the same way like he did or you’re doing.

Well it seems to me that you’re on the right path! While I’m shooting for 20 pips here and there from fear. I’ve got to do some serious thinking about all this. At the end if I were to aim for 20 pips here and there why do all these work. I could go get an EA or put in an indicator.

Good trading day Mike!

Hi rookie and others (Mike you also get now some chance to comment),

I see I have a bit to catch up so I start now.

First of all here is something to read about Russia/Ukraine:
Russia and Ukraine: Can we stomach more lies from the US media and more hubris from US foreign policy? | Forex Blog: Currency Currents

If it is too long, then just go to the forecast section on the very bottom how Jack the Pipper sees it in case the war stays.

Actually rookie, you already answered my strategy of trading in your own post. I will stay aside as well. Or as Mike would say: “I regroup myself.” :slight_smile:

The thing is that I only like to trade one direction: the direction of my fundamental, sentimental bias and the trend. I do think these three increases my edges a lot. And now I see some movement in USD strengthening at this very moment but I do not really know why. I also think that what peterma wrote about USD Index, and all of you expect, I do the same: some retracement. USD was/is very strong lately but some retracement comes usually. I wait a bit, look how it works out and when it was done I jump in again. Until now I learn today and use the occasion of not trading that much. I do have strong USD bias but there has to be some stop for a while. As Philip mentioned, different traders have different strategy.

I personally do not like trading against the main trend. I tell you an example, maybe you can understand it: we take the EUR/USD with the current market price: 1.3277 (Jesus what a decrease again, what a pity that I wasn’t in :slight_smile: ). I have a USD bias. So lets say I jump in now on market price. Trade goes against me and it is already trading at 1.3325 and then 1.3375. I am still not in a big hurry, because I look at the big picture and do not see any reason why it should not come back. I may even do everything against the rules and scale in to my losses with another short position. Of course this works ONLY WITH STRONG BIAS. So now we take the opposite direction. I anticipate that EUR/USD goes up but I still have my bearish overall view. I do feel now uncomfortable with the trade. Even if I expect retracement and some EUR strength. I jump into market again with EUR long this time. And lets say trade goes this time again against me, south now. The problem is: I do not have any idea if it comes back or not because I do have a bearish bias and a retracement comes but who knows when and how big it will be. So where should I stop my losses? Where is the trade invalig? As you see there are many questions which I did not have in the first case. Hopefully you understand what I mean. I tried to explain it clear. So even if I think there has to come movement across the board vs. USD I do not trade against it, I rather wait and see.

Another thing that works out quite well in the last 3-4 weeks: I do stick to my weekend discussions and plans! It is really cool and works good. I do try to be very disciplined and really follow my plans. Just to remind you what my main tasks were for this week:

  1. do not enter many new trades, rather monitor and manage the open trades from last week. Especially vs. JPY, where I do not want to open any new trades.
  2. manage the HUF trades.

Well, the first point works good. I did jump into some great setups, but not many and only short-term. I also closed all new positions. But managing the trades from last week goes good and I reduced my JPY trades from 4 to 1 which is also good. About the HUF I cannot do much as nothing happens. I just have to wait there.

There was nothing new in this point, but I wanted to emphasize how good discipline works the last time. Not only managing trades but not jumping into situations when I am not comfortable. I did it earlier and it worked out really bad sometimes. I do not want to be in stress when I don’t have to. I rather start reading the second book after finish answering all your posts :slight_smile:

Hi Mike,

I do like your new cross count method actually more! I do not start the mathematics now, so I do not know after 1 day if the result (+3) is accidently the same in both measurement or it will be different. We will see. If it is the same then it would not matter which way to use, if it is not the same (I would think this second option will happen) then I like the second. There is something though to keep in mind in the second measurement: a Major currency can only move between +3 and -3 and a comm currency can move between +5 and -5. So the extreme level is different and commodities are more likely to be on the very to or very bottom and majors have more chance to stick in the middle.

Hey FE.

I’m glad you looked at that.
But, let me tell you (as stated before), it all shakes out the same. The boiled down number will always be the same. I ran so many back tests. Got tired of seeing the same thing. But, we do need to work on the measuring stick, for the gauge.

I’ll get it.

Thanks!

Mike

Hi rookie and Mike,

wow slow down guys. For all these posts I try to answer in 1.

Aussie minutes: looks bearish to me.
BOE: rookie already analysed (you do quite a lot fundamentals lately!). I do see 2-0-9 result quite bullish as usually we only see 0-0-9. [I][B]peterma[/B][/I] is the expert of GBP so I highlight his name to express the waiting for his opinion what he thinks about GBP.

You guys write a lot about MG. Please send me the link. Want to see what he is doing. However, Mike you should I think pay attention. No matter how bullish we are on USD, you are long with it in long-term vs. most other currencies without a stop loss. That sounds dangerous.

And rookie, why do we do all this work? I can tell you easily: to get the right direction! That is all! :slight_smile: An EA will never tell you what is proper lot size, if news is coming, what should be a stop loss, risk/reward ratio. I do believe there are good systems as we use our own system as well. But I would not trust a computer to do trades for me. It makes once a mistake and my account is maybe away.

Good day guys. I do not plan to trade but read the thread.

Hey guys…FE.

Got caught up on the posts now.
Man…I know what your talking about! When it comes to deciding on whether to get in or wait for a retracement. I’ve spent countless hours thinking about that! It is such a dilemma! Just after I got home from work yesterday, I checked the charts. Yeah, sure, USD was tearing it all up. But, I realize that just as much as a chance that it will retrace is about the same chance that it will just continue to flow the way it does. So, I just went ahead and put in some more trades. That’s when I added on JPY, AUD, EUR to the portfolio. It didn’t feel good, but, I just didn’t want to be missing out on the action. So, this morning after I woke up, man, am I glad I did. This gives me more room to play with. USD is just continuing its march. And also I think that if I’m wrong, (this is how I rationalize this play) I will just hold on to it for a longer time period. That’s why I told Rookie that I will plan on holding USD for days to weeks. That mindset is what got me into these extra trades. And I’m pretty lucky that their going my way. And meanwhile this is all after the huge spanking the US did to everyone on Tues. It is gut renching! But I guess I would rather take the loss than miss out on a serious roll. “If it’s trending, I’m in it”. That to me outweighs the losing part of it. Now the USD is trending. I just so badly want to be in it. Also I have in mind (the bigger picture) the fact of how everyone was wanting the US to be boss this year. Slated to anyway. That WAS the sentiment at the beginning of the year. And up to this point it was not the case. But I feel now is the time for that.
Look…I’m nobody special. Not smart. Have no insight. But, given what you and our buddy Rookie have been saying about the retracement dilemma, I just had to throw in my thoughts on that. I know I can get burned at any time. But I guess my bottom line thinking is “If it’s trending, I’m in it”. I’m just glad that I have the guts (at this time anyway) to be in it.

It takes a stomach.

Mike

Hey FE!

Check out the thread. It’s a long one. That is fundamentally how I trade. But it is ONLY a methodology. Not a mechanical or signal strategy. You have to tailor it to your own liking.

http://forums.babypips.com/show-me-money-swing-trading/50672-forex-portfolio-how-gain-consistent-profits-staying-market-24-7-a-123.html

Start from the beginning FE. Page one. Sorry this is not the beginning, but will get you there to it.

Mike

PS…need to know what you think!