Hi Peter,
you are usually right. I really have no idea about the picture. I pass on to my 4 other colleges. Our US department does definitely have a better chance in this issue than myself.
I make soon (and hopefully fast) the COT analysis as I am not there for 3 days.
See you guys soon
So, let’s see what the COT Report tells us this week. Very important that the percentile factors and net positions will always show the non-commercial speculators vs. data from the previous week:
[B]AUD[/B]: 62.43% current vs. 69.55% previous. Net position: 22 140 current vs. 41 229 previous.
[B]CAD[/B]: 55.61% vs. 60.54%. Net position: 7 544 vs. 11 630. Rookie pointed out more often how bad it is for CAD that oil prices go down. On the other side the US economy rise is for sure good for Canada too. We have to discuss the issue. I find CAD long a good option at the moment vs. weak currencies to diversify my USD long trades. CAD also has a little, but positive carry trade.
[B]CHF[/B]: 34.67% vs. 29.38%. Net position: - 11 396 vs. -13 825. Probably it is the currency that divide us the most. I have seen from you guys many post with long ideas. It does make sense on some technical basis but keeping mind the SNB in the background for me it looks suicide to go long on the border of the 1.20 EUR peg.
[B]GBP[/B]: 47.20% vs. 59.43%. Net position: -6 584 vs. 26 727. Open interest: 134 560 vs. 256 591. Now, does it make fun to understand from the numbers the whole story? As we work together longer it makes a lot more fun to analyze these reports and see how the fundamentals are confirmed in the COT. I have never seen something like these numbers. GBP lost almost half of its open interest in one week! Now we all know this has to do with the risk of the Scotland vote and investors took their capital out from the UK. The currency became also very bearish compared to earlier readings.
[B]NZD[/B]: 53.02% vs. 74.77%. Net position: 1 120 vs. 9 522. Now here is an alert guys! Looking at the last 4 years data we are heading with fast speed to a COT absolute extreme. Speculators are net short very rarely. We are barely in positive now so better watch out.
[B]EUR[/B]: 26.85% vs. 21.49%. Net position: -137 149 vs. -157 505. Open interest: 397 652 vs. 484 306. Here we can also see a huge difference in open interest. I do not know if it has to do something with GBP or there is another explanation for it.
[B]JPY[/B]: 23.74% vs. 12.77%. Net position: -83 182 vs. -100 673. Now as we see there is a divergence. The speculators got more bullish but this was not confirmed by price action as we have seen more bearish movement. We are away from being at an extreme level.
[B]USD[/B]: as Peter already said, we are at very high levels, should maybe watch a bit out with those long positions.
The [I]USD/RUB[/I] has arrived to historical highs and on my short period of COT analysis it is at the most bearish reading with -6 701 net positions. Look at the fundamentals, this can easily not be and extreme for the Russian currency. There is also something interesting here to mention for COT fanatics like we are. There were only 21 traders for the Ruble. Keep it in mind, if the number goes under 20, then CFTC does not report the results anymore until the number reaches 20 again. In the current economic situation the interest for the currency got a lot less as before.
[I]Trade setups for the week[/I]: I am still bullish with the USD and see some good CAD long setups and short CHF.
Hey Peter.
I’m really [I]curious[/I] about this myself.
By [I]George[/I] I think I got it. :35:
I give up Peter,
Can I take a quick peek at the answers by any chance ? I said I give up so that shouldn’t considered cheating or is it :54:
Hey FE good report. I know you wont be here probably but didn’t the GBP also diverge? Speculators got bearish but price moved up?
I’m intrigued about what you found in New Zealand as the system we are testing also turned bullish at an extreme last month.
Hi Philip,
I am leaving now, thought I check quick the thread. You have written in the best moment.
And you see it right, there is divergence with GBP. Please discuss it with Peter what that could be! Rookie also writes a long report, maybe he can try to figure it out. Good that you have recognized it.
Yeah, the NZD you will see it yourself. There is still a little to go for NZD but not that much. Maybe the big rallies vs. NZD will not come that often anymore.
I try to read the analysis what you guys make. I wish you good work and I am waiting for the setups too
Here’s a recap on how the trades based on our crosses system worked out last week.
[B]GBPCHF[/B] up 162 pips.
[B]GBPJPY[/B] up 345 pips.
[B]GBPNZD[/B] up 64.9 pips.
[B]GBPUSD[/B] up 14.5 pips.
[B]NZDUSD[/B] down 24.5 pips.
[B]NZDCHF[/B] up 53.6 pips.
Total pips for this week= 616.2 pips.
This brings up the total amount of pips since we started the test two weeks ago to 1070.2 pips.
In a bit I will give my analysis for next week.
Hi guys!
Good morning and good weekend.
I got all my ducks in a row now. So, here comes some perspective.
This weeks run down.
Monday/Tuesday/Wed////Thursday/Friday
NZD////CAD/////USD////GBP//////USD////
CAD////AUD/////GBP/////CHF//////CAD////
AUD////CHF/////CAD/////CAD//////JPY/////
JPY/////NZD/////EUR/////NZD//////NZD////
USD////GBP/////CHF//////EUR//////CHF////
CHF////EUR//////NZD/////AUD/////AUD////
GBP////USD//////AUD////USD//////EUR////
EUR////JPY///////JPY//////JPY//////GBP/////
[B]Majors vs. Comms[/B]
Monday: C +14
Tuesday:C +12
Wednesday:M +5
Thursday: EVEN
Friday: C +3
So this week goes to the Comms. With a total weekly added up score of +24. ( +14 +12 -5 +0 +3)
Little retrospect here.
Sept. 1st week—Comms (was the 4th in a row) (+27)
Sept. 2nd week–Majors (+52)
Sept. 3rd week—Comms (+24)
So, for the month of Sept. we can see, yes, Comms took 2 weeks of 3 so far, but when the Majors took that 2nd week, it was by a lot! Basically we could call it even so far for the month.
And this is talking about the battle between Majors vs. Comms.
Here goes the strong down to the weak. For this past week.
[B]Total pips[/B]. Weekly candle difference, against everyone.
CAD: +1462
GBP: +666 (:16:)
USD: +332
NZD: +104
CHF: -296
AUD: -548
EUR: -728
JPY : -992
[B]Majors vs. Comms[/B]
CAD: +1086
NZD: +157
AUD: -225
GBP: +48
USD: -13
CHF: -150
JPY : -399
EUR: -504
[B]Trending[/B]:
Remember 2 weeks ago (or 3) we had at the top USD, AUD, CAD tied, trending high both long and short term against everyone. And between them three they were ranging. Even steven.
Then last week AUD dropped out of that quickly. CAD dropped just a tad while USD upped it some.
Now we have CAD boosted back up to the top. And now I have determined that the USD and CAD are tied at the top, trending high against everyone both long term (weekly charts) and short term (daily charts).
And between them I have them ranging long term and short term. “RR” .
And the difference being CAD shot up, and USD dropped down (between them two).
Ok guys. That’s some perspective. History.
Now let’s compare that to what’s up and coming. Trends to continue? New trends gonna come about? Changes?
Oh, Philip. Man…I’m so curious to see what you got. You have to be pretty specific when you explain it to me. I’m not exactly the sharpest knife in the drawer.
And if it’s top secret stuff, private message me. :57:
I’m so looking forward to seeing what you’ve been working so hard on.
Mike
Phillip, out of curiosity. Where would my stop go on these entries?
Thanks,
Mike
Rookie, I’m a grandad, so I watch some cartoons when the kids come to visit - one called Curious George 
Two good post there guys.
Two guestion on Philip. Can you please write exactly how you used our system? As far as I know you used the system rules but not the COT Index for crosses. You wrote there something about running it in a program or something like that. The system looks very good we should all start testing and discussing it simultaneously. That is why it would be crucial from you to write a very detailed post about all the steps you make from the beginning to decide with the pairs, which entry and exit you use (I guess the exit is the 3 bar method). Once and for everyone in 1 post discussing all issues.
Oh man I forgot the other question but I have to go. See you guys later
PS: if I have time I try to share some thoughts on how I see NZD currently
In this perpective I understand the tricky answer from Mike! Still I do not know the George guy
Hey guys…I’ll explain Curious George.
This is a long time book. Child’s book called Curious George. Then turned into a cartoon. It’s about a monkey named George who often gets into mischief. He lives in an apartment building with his owner “the man with the yellow hat”. And the doorman of their building has a dog called Hundley. George and Hundley are friends. They act as if they are little kids. And George is always getting into trouble.
It’s a great book for little ones. Very popular here in the States.
Don’t go buy it. Unless you have youngins.
On COT divergence on GBP - this is interesting - the commercials have switched sides, now net long, price up and OI down.
I’ll just quote Williams -
“Price up, OI down is bearish (conventional wisdom) - remember I said conventional. I do not say it is correct.”
“Low OI means the public and funds have lost interest in this particular market. Their attention and money have been diverted elsewhere … the fact that the public are not interested means I should be.”
Williams later quotes some examples " The hefty decrease in OI means that the only buy orders coming in (new trades) were from the smart guys while the large traders were selling short or decreasing their bullishness by not buying.
Again our inside view of the inner workings of the marketplace reveals what is really going on here, and in this case the OI decline is bullish".
Basically Williams is suggesting that when he sees a decline in OI coupled with a marked increase in Commercial buying that, in his words, “a rally is near at hand”.
He suggests the opposite case scenario is where price has been in a rising trend, there is increased OI coupled with an increase of Commercial shorts, then a top may be near at hand.
Edit: Page 91 “opening up on Open Interest”
The idea of the crosses system is based on the 1 minute trader system of Larry Williams.
Step 1: I wrote all the crosses for the currencies we do the COT report for (USD, GBP, CHF, JPY, AUD, NZD and CAD.
Step 2: I wrote the currencies in a another row.
Step 3: I calculated the commercials’ net position of each currency.
Step 4: I calculated the net position of the crosses. Example: I want to know the commercials net position for EURUSD. I simply add the commercials net position on EUR to their net position on USD.
Step 5: I calculated the lowest net position and highest net position for the past 6 months of each cross.
Step 6: I calculated the COT Index value of each cross.
Step 7: I highlight the crosses that are under 20 or above 80. Then I go to my chart.
Step 8: I look for bottoms at the chart using the 1 minute trader. So for example let’s say that GBPJPY gave me a value of 100. This means the pair is at a bottom. So I go to a weekly chart of GBPJPY and plot the 52 week MA. A buy signal is triggered if the value of the MA for the latest week is higher than that of the last two weeks. The opposite (having a value of 20 or lower and an MA lower than the previous two weeks) represents a sell signal.
Step 9: Take the trade on the first minute of the Monday trading session.
Step 10: Close the trade at the last minute of the trading week.
That’s all there is to it really. I have been looking at possible technical entry and exit techniques. But I have not used them for the test yet.
I hope this clears things up.
I absolutely loved your analysis and it really cleared things up for me. My concern though is that commercials themselves have also decreased their positions. Doesn’t that affect our analysis?
I think what Williams is saying that with such a large exodus from the swimming pool it is important to watch what those commercials remaining did, in this case it seems they switched sides and went long.
(For those not having read Williams’ book, he likens OI to swimmers in a pool, the pool is the market and OI are the swimmers (players), a drop in OI and many swimmers got out.)
It will be very interesting to see next Friday’s positions, I would like to see a strengthening of their longs, maybe not as definite as last Friday’s but at least some sort of additional longs - this would help confirm what the fundamental numbers are saying about the UK economy outlook, despite the fall in GBP.
Hi guys,
I did what [B]Mike[/B] suggested last time. I made likes so you guys see I read the post and like them, only cannot answer at the time. Now I made the time. Mike, you answered only for the riddle from Peter. Now my cartoon knowledge is also improved.
[B]Philip[/B], thanks a lot. I wrote down the points. I like for the early phase of the test the entry and exit. It makes it simple for the test, later on we can use other techniques. Now it is enough. Sorry, we move so fast, did you write something about entry also or only hightlighted the two possible exit scenarios until now?
And I also remember what was the other thing in the afternoon what I forgot. It wasn’t a question. I wanted to thank you for your work vocation (not 100% that is the right word). In this thread everyone has his place but you just give me always a huge help and backup. I really believe in the crossover system, highlighted the idea and thought it can work out. Others were busy with course (this is very acceptable!) but you came in, were positive about the idea, helped, brought new ideas and did not let the action “die”. I think the biggest problem is with innovative ideas that no one looks into it, it is not tested and after a time it is forgotten although the work was in it and it might have changed everything. I was/am busy at these times but you did not forget about it, you made the test and continue the work. I am confident with the thread and new ideas because I know even if I am busy or forget something, you are always there to help out. Also when I cannot push the issue further on, you step ahead like it is an intuition and get into the action to push the issue further on. This is great and thanks again!!! Your post was great, I wanted it with steps so I can do exactly the same way the test as you. I go back now and read all post, check in the beginning of the week timingcharts too, and start working on it. I see huge potentials. As you also said, if we do the work we should work now on efficiency. I also think we should continue the testing, looking at maximum drawdowns, optimal lot sizes, entries, exits etc. and when we found it, work will be quite easy and the gain comes. We can name the compact system something like the “MikePhilipRookiePetermaForExchange System”. If flows turn up again we can add his name into it.
Although you explained the system great, I still have 2 question that I need to know. When you wrote down the steps I saw right away the point I did not get the last time. It is the “1 minute trader”. I do not know if it is a charting program, a term, a special forex expression or what exactly. So I do not know what you mean under that and if I can do this step at all. The other thing was about your excel steps. The question is if you calculate and evaluate the values one by one or do you use equations in excel that you just put the position numbers in and it calculates everything? This is very important because the work you do looks huge. If I do it with all alone it takes me I guess at least a day to get the thing first, but later on it would still be 3-4 hours at least every weekend. So I am interested if you do it all the work or you are great at excel. Again, google drive would be good or to know your formulas.
[B]Peter[/B], thanks for the explanation, I guess we are expecting the high quality content you always give to us. Everything was exact, the page numbers included. I like that you wrote it on OI because for me it is just the toughtest part in the book. Philip made a concern, I do it too. Not to question your knowledge but I think we cannot forget in this case something. I am interested about next Friday’s report too. However I am quite sure on OI rise, no matter what. The thing is, the book was looking for the OI examples as great game changers as I remember with the very low readings. I do think we might have a very special case and no game changing at all. This case was “The Vote”. I call it with this name because participants just wanted to get out their money from the uncertain UK. It does not necessary tells us I think a game change, they did not want to be in risk. I can expect the trend going on, both longs and shorts will be adding for both specs and commercials next week and The Vote ended with a “No”. Do not think that I do not find your answer relevant, I give it at least the same as possibility as for my version. I just thought mentioning it, because I think in this case the descrease of OI was dependent on a very special event. We will see what happens.
Maybe you guys are surprised how am I in the thread. I really do not have time but luckily I have internet where I am. The weekend is really tough but I decided after I found net (I am not an iPhone or high level mobile freak so I do not have internet there) that I just sleep less and work with you guys.
Ok guys, I have some thoughts on NZD that I also want to discuss with you, I post it soon.
Hi guys,
I said I write on the NZD in an extra post. The thing is that I see some fundamental and COT divergence.
Since we follow here the COT report we have found some extremes, but these extremes were only extremes compared to the 3-4 months data to follow. So relatively short-term. This time however we are heading quite fast to a 4 year low extreme for the NZD!
Where is the problem? If we are reaching a 4 year extreme, then the chance should be good for a reversal. Now here comes the problem as for a reversal the fundamentals should be supporting the rise I guess.
My view is a short-term fall still, until the COT extreme as diary prices are still falling and AUD is not doing so good either. As rookie or Mike posted once, I think we have seen an article where they wrote that prices for diary will rise in the end of the year. This would come quite good to our COT extreme and might help the reversal! The carry trade is also on the NZD side so a short-term bearish (maybe even 1-2 months) are still in the play and then a reversal based on COT.
Now here comes the problem with the reversal. As there are quite some fundamentals against it. If AUD goes down it is not good for the NZD for sure. USD getting strong and Comms are going down generally which is also not good for the NZD. Data are also not so great which is of course not good for NZD. Not even mentioning if diary prices will not rise.
Usually I feel good about a good with a one direction bias. Here we see many mixed information which makes it harder to decide which way to go. In the current state [I]I still favor short-term downtrend and long-term uptrend[/I]. If some conditions change I stay flexible and “update” my view.
I thought it is important to mention as I am really exited about “our” first really extreme COT signal since the start of the thread. In this excitement I do not forget Philips 1-2 posts; maybe in August when he already highlighted his long-term NZD long view. The data slowly moves to this direction.
So as always, I am looking for your opinion.
Hi Philip,
you work quite a lot already and I do not want that you wake up with a nightmare with the many expectations but I ask from you one more post.
It is about the seasonal trends. You have been writing about your expecatation in August, what might come in September. I did not find the post (went back until 890 so that is why I guess it was probably in August), but as I remember you wrote Comms strength (AUD and NZD mainly) and GBP strength. But I am not sure if it was like this, my memory says it. Now if I am right, I do not want to pick on you (because of the Comms lost), but I do find it important to write us a quick review what exactly the expectations were and how they work out. I do think it is another issue to learn but if we only write about it before the event and comes no evaluation later on than it is a lost discussion before the event. End of September is already there so it might be the right time to analyze it and remember how it worked out, regardless if it is a positive or negative result.
As you guys see, I stayed up with my standard pretty late to contribute here, I try tomorrow abend also to come here for some time.
Cheers