COT Report Analysis - a thread on market sentiment

Ok I figured out the problem, I was looking at FX charts when I should have been looking at futures, I’ll report back to you on what signals we could have taken this week.

[B]EDIT[/B] After running the chart I see that there is a sell signal in Canada triggered last week. There was also a buy signal in Pound (let’s see how pound cad do). Another buy signal in New Zealand (Not going well).

I don’t know if these are a lot of signals or not. But trading GBPCAD and NZDCAD based on this signal alone would have made you 312 pips on the first and -30 on the second (that is so far for both). That is not bad.

BTW Adam Button, although acknowledged its poor fundamental, said that New Zealand Dollar is the standout performer for September being its second best month in the last 10 years. So if you guys have the signal let’s keep an eye on it.

As we talk a lot about the Aussie, here is the article from Forex Gump:

Economic Data Roundup: Australia

The first part shows me we can make some short-term long trades, but as I am really concerned about Chinese economy, on the long-term I am more bearish.

Definitely like it. Let’s see the AUD signal confirmed next week. But we had so many arguments in the past, now look who is looking to sell the Dollar and buy Euro :stuck_out_tongue:

Thanks for the article FE! that pretty much explains why AUD has been a disappointment lately. Bias has changed.

I still have two open positions on EURAUD FE, I think I may have to close those soon.

If you guys read latest headlines just 2 hours ago EU went ahead with second round of sanctions against Russia I’m hoping that would push euro a bit further down so I can cut my losses a bit on EURAUD trades. We’ll see.

NZD rate decision and monetary policy statement came out at 4 am in where I live Bangkok. Usually I’m up by then but that morning I couldn’t.

So now the ISIS, I wonder how that will affect the USD what do you think FE ?

Hi Philip and rookie,

just fast:

Philip, I am not buying the EUR that is for sure. You might have read it yesterday in a post but rookie told me so I corrected the mistake right away. If I do not want to buy 1 currency, it is the EUR. Until the point of course when we find the extreme.

Thanks for the info on NZD.

rookie, I think ISIS can mostly affect CHF and JPY. Of course US too but as USD is running good anyway it is hard to say how much can we say it is because of geo risk. Buy JPY and CHF it is harder because their economies do not perform so good so there are countertrend movements in the short-term.

I would say we keep tracking this cot index indicator and try to get better in it. It looks quite good.

See you guys

I like what you did with AUD and JPY there FE…

I agree with the entry criterias as well it makes perfect sense to buy when its above 80 and MA 52 weeks as I see euro at 100 currently and it has been since May this year but if we plot 52 wks MA I’ve got it on daily chart we can clearly see while euro was at 100 the price was falling just below MA.

I set mine to daily I don’t see that many entry signals. I do see a sell signal for AUD currently at 0 and price below MA and buy signal for pound however price is still below MA but I already see a bullish candle. We’ll put this to test guys… I’m excited!

On daily or weekly chart ? Ive set mine to daily and I do see sell signal for CAD price below 52wks MA index at 16.96. I don’t see NZD however, wait… are you on with different charting ?

Hi flows,

great news for you!

Here is your profile:

  • you are a technical trader
  • only sentimental analysis you follow is the COT report
  • you have long experience with timingcharts.com
  • you just appear in the right time when we started to discuss our new “powertool”

Does it make sense? Is there a better occasion to say being at the right place at the right time? I do not think so!

So, how about this: you read once more the articles here about our new COT index indicator system, you help to develop it and click through the used settings on timingcharts.com on every weekend. You would post here with words or pictures your finding and we would discuss it. I tell you, you would learn a hell of a lot from it. It is some work but not as much as the others have. I guess it would be 15-20 minutes to do the charting and the same amount of time to present your findings here! You would be involved here in the forum with a technical analysis on COT which is anyway your portfolio! For that, you will hear our opinion on your findings and you either confirm our findings or go against it, but we might find even better setups!

There is one important thing to mention about the job: it would be nice if you do not only click through the 7 forex currencies but all products that we can buy/sell at an average broker. As I said once, I do not care if I sell wheat, oil our pound. If we learn the analysis anyway then it is a waste of opportunity to make the analysis only for a fraction of the cake. With more products we increase our successful signals and efficiency.

What do you think? You do not get such an offer every day!

Waiting for your answer,
FE

PS: I expect here some background push from the other guys :slight_smile:

It does not matter where price is related to the MA for this system. What matters is the value of the MA compared to the previous week. So once you see the value of a currency’s index reach 20 or lower, that means a top is near and we will look for sell opportunities. A sell signal is triggered when the value of the MA for the latest week is [B]lower[/B] than the week before.

A buy signal is triggered when we enter 80-100 extreme territory, and the MA value gets higher than the week before. Hope that clears it up.

Hey guys.

What do you think about this. Go down to where he is talking about USD/CHF, and the 73% correlation to the spot market.
COT Report - Forex Walkthrough | Investopedia

Look. I’m reading up on this stuff. Maybe you are all saying, “Mike, where have you been, old news”.
I’m just talking about the point of the USD/CHF.
That’s all.

Good or no good?

Mike

Edit…Look at “using the COT report”. 3 good points. Probably old stuff to you all.
But under that explains the USD/CHF correlation.

Hi Mike,

I would not say good or no good. I think it is ok for beginners but we have passed this category. Still, it makes sense to read such stuff becuase if you get only 1 new information then you have learned something. Without searching for new materials it is hard to get involved in something new.

Still I can suggest to read the Briese and Williams book as you have much free time after reaching your goals already!

FE…I’m on it.

Good idea.


Is that what you mean by value of MA for the latest week is lower than previous week ?

I’ve set my MA to 52 as FE suggested. To me this looks like a sell signal from what I understood. But the problem here is though it is relative to USD. I know FE and you have been talked about this. I’m just a little wary to use this for crosses. Same goes for COT analysis that we do here.

Hey fellas.

Well, I’m very sorry to say that I just don’t have time to produce and get out to you Thursday figures.
Don’t worry, I will get it out to you. (I need to see what happened myself!)
As soon as I get up, I promise, I will get the data out.
Probably at about 0800 GMT it should be aired. That’s 4am for me. Plus it takes between half hour to 45 min to get it all compiled.

I apologize.

See ya soon guys.

Mike

Let’s take it step by step. Since we are looking for signal’s for next week. The first thing we need to do is wait for the week to end. When that happened you check the value of the index, if its at an extreme you move to the next step.
If it is at an extreme, hover your cursor towards last week’s candle and then you will see the details of the candle (open, high, low and close.) Along with those, you will see that he is also giving you the value of the MA (at the moment it is 0.9196) we need that value to be lower than last week’s value (0.9200) to trigger a sell signal in AUD.
Try it and let me know how it goes.

Hi guys.

Here comes Thursday.

GBP: +7 -0 0
USD: +4 -1 2
EUR: +4 -1 2
CHF: +4 -1 2
NZD: +2 -4 1
JPY : +2 -4 1
AUD: +1 -6 0
CAD: +0 -7 0

Majors took it AGAIN. +14 That’s a lot!

So, going into Friday this is how it looks for the week.
Monday—M +8 ------------USD dominated
Tuesday–M +12 -----------EUR and CHF dominated, with GBP on their heels
Wednesday-M +3 -----------GBP dominated, with CAD on their heels
Thursday—M +14 ----------GBP dominated

Majors vs. Comms

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

Notes:

The USD, EUR, CHF was only down against the GBP.
JPY was down only against in-house. (GBP, USD, EUR, CHF)
Regarding Comms—interesting how CAD was weakest of the bunch, as opposed to yesterday, they were the strongest COMM.

How about that GBP? Just dominating from the Majors. (I was right about them you know) (It’s a good thing I’m not greedy)

One last thing…since the Majors took every single day this week, do you think there’s gonna be some profit taking today (Friday)? And go to the Comms? Or are we on a pretty good slant to the Majors?

I’ll be in touch.
Sorry again guys. It was our anniversary, and I just had no time. She even asked me if we could go out, after work, because of the time I need for this. So you know…priorities.

Mike

Hi guys,

rookie, it is ok that you are wary on the issue. It is something new and anyway, even if it works we do not jump in automatically for COT signals, like you say, so we also do not do it here as well. We use COT to decide our sentiment, this is an indicator for long-term (very important not to make conclusions after a couple of days) and we have to test it first.

I have to say Philip helps really a lot to solve issues and I appreciate that! As he said; rookie do everything step by step. I also wrote that this is not a signal yet. The MA is on the candle, it has to be above the candle and under the two weeks before moving average (thanks Philip to bring this last part in). One little correction I made compared what Philip wrote (page 151 in Williams book): by looking at the MA this week, we do not compare it to last week’s candle but the one two weeks ago. I guess this gives some space for spikes and false breakouts.

Philip, just to be exact, it is a very newbie question but are the values of the MA shown in our charting software or do you just read it from your chart? I never really looked at the values, only how it is compared to the candlesticks. In timingchart it shows me 0.9192 and not the 0.9200 mentioned form you. Also, where do you see there 0.9196? These are very little things but if we work together it would be good to use the same values.

for “not greedy Mike”,
congrats for the anniversary! And please don’t excuse yourself. If you never take one/more days even weeks sometimes off then you will be burnt out. It is a long-term thing, we need some breaks. I will be also some days of in September still, Peter is now, rookie and Philip and you should also make some time off. Just to refresh yourself and chill a bit. Your wife is very nice for the questions but do not lose her because of this thread! Mentioning your analysis, interesting outcome, seems like the Majors have seen your record breaking stats last week for 4-0 run for Comms and this week they make a complete and huge home run against the comms. No matter what today happens that is just a huge results with 3 very easy wins and 1 tougher. I JPY would not be so negative every week for Majors then this difference would be even larger.

Last but not least I think the sentence of the week goes to Philip with his suggestion for rookie: “Try it out and let me know how it goes.” I just laughed myself to death. It is a nice way to say: “I am curious with the new system as we have not tested yet so put your money on the line and we’ll see how it goes.” :slight_smile: Just great! LOL

I think if we do not want to trade the system now, it is also ok, we should look for signals, trade it on demo or just look back later how it would have worked out. Important is to find together the signals, write them down and follow them, also with discussing what would be the right time to exit it.

Have a great last day of the week (of course weekend session is still to come)

One more thing guys, I entered two trades today:

[B]GBP/JPY short[/B]: it does not happen very often that I just go with technicals but I have been looking since a longer time for this setup. If you look at the charts it is an obvious technical setup. I think I will see it quite fast if it is a breakout and the channel does not hold. If you want to look at it, use the daily TF.

[B]AUD/USD short[/B]: this has a bit hedging reason. I think that this pair goes down in the long term but my two AUS long trades (CHF and EUR) are not doing good so I open a bit larger position to hedge them. I still believe all trades can turn out good. On one side USD is very strong so I think it beats AUD (not only fundamentally but technically too). On the other side CHF and EUR are having great week with all Majors but I consider them to be week. I think AUD can come back after the EUR retracement. Best case scenario a temporary AUD comeback to close with nice profit my CHF and EUR trades and then go to south with my USD trade :slight_smile:

If my plan does not work then hedging will limit my current losses.

Hahaha FE you caught me. You make me sound evil. It was just my way of telling him that I’m not putting my money on the line yet, so he can take the hint without having it sound like I’m bossing him around that’s all :slight_smile:

In regards to your point on the MA comparison, you’re absolutely right about the two week thing. It is just that a few paragraphs above that he says one week. So I thought it was a matter of preference. But let us all stick to the two weeks then because I share your view that it is a more confirmed one. (Although what if let’s say we were looking for sell signal, 2 weeks ago the MA value was 10, 1 week ago it was 8, then this week it is 9). So may be the optimum way is that it the value is lower than each of the previous 2 weeks.

I do use my own data, and generally data should differ from one provider to the other but they shouldn’t be completely different. So my data of COT index have different values (not by much) but we match in terms of the extremes. The same thing applies with the MA; it does not matter what the value is as long as both show a lower value than the previous week. I decided to use my own data as I still don’t trust the site (I still look at it though to compare.)

Thank you [B]Mike[/B] for doing the stats and congrats on your anniversary and remember that family comes first. I’m sure with more progress the less time-consuming all this will be. I mean look at the system FE explained for us this week, and compare it to how we use to trade the COT report only 5 days before that and it is a world’s difference, more efficient as well.

What I like about your results is that it reflected the bias of the new system exactly; buy GBP and sell CAD. Contrary to FE’s suggestion in the last post, I have already put some money on the new system with my GBPJPY long, 80 pips in profit so far. I use technical analysis of course for entry, the new system is only the bias. I actually got an GBPAUD buy signal in the Asia session but I decided to pass on it, which seems like a bad decision in retrospect, 60 pips up since then. Having said that I’m starting to see some divergence in GBPJPY and we could be set for a take profit day like you said. Let’s see how the day unfolds.

Good work everyone

Hi Philip,

I agree the bias is the most important. That is why I trade GBP/JPY also with caution as it is vs my bias what I definitely don’t trade often. I just try here a short-term technical setup and it is also actually vs. my own bias which is quite bad, I have to admit. Your long GBP trades can make definitely some money. It would be great if the pair moves down to give me short-term win and then turn to give you a longer-term win :slight_smile:

I actually have to say Mike that Philip is right again. We really have to invest now the time to get our system working better and better and the thread is changing continuously, keeping the COT in the middle point. After time we will see what works and what not. We will I guess always do our COT analysis, define our bias, get maybe confirmation with COT Index and enter the trades. If COT index does not work then we get something else. Point is to get more efficient and with the time it goes faster and better.

Philip mentioned the new system vs. our own analysis. It is hard to compare in the beginning of the test but that is how I see it: with our analysis we might define the very big reversals better and faster. This “new” system should give us though great entry points along the way for during retracements and using the MA and the COT Index it is actually a quite strong mix for confirmation. I think it is not a bad idea to define what we expect from our analysis and what form this system. The two together can be extremely powerful. Just think about it: if we defined the turning point with EUR/USD with our analysis and made 4-5 scaling in during the trend with COT Index!!! Boys, that would have been something! It will be great to hear Peter on that. I do not know if he wants to read the whole discussion though. :slight_smile: