Discuss Trader Sentiment and Positioning at the DailyFX Forum
The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over the last 52 weeks. A reading close to 0 suggests that a bottom is forming and a reading close to 100 suggests that a top is forming. The readings are for the actual currency, not the currency pair. For example, a reading of 100 on the Canadian Dollar suggests that the Canadian Dollar is close to a top (USDCAD close to a bottom).
Readings of 95 and higher as well as 5 and lower are in boldfaced red type to indicate potential market extremes. The last 4 weeks of the COT Index are shown because it is just as important to know where the index is coming from. For example, an increasing index is bullish until the index is extreme (near 100), at which time the risk of a reversal or pause in the trend increases.
[B]US Dollar Index: [/B]The 52 week COT index is at 94 and the 13 week index is at 75. The US Dollar has turned from an optimistic extreme and should be in for a period of sustained weakness.
[B]Implications: [/B]Bearish
[B]EUR: [/B]The 52 and 13 week indexes are at 35 and 92 after being at 2 and 8 a few weeks ago. The turn from a bearish extreme keeps us looking higher. Although the 13 week index is near a bullish extreme, this shorter term index usually does remain extreme for at least 2 to 3 weeks.
[B]Implications: [/B]Bullish
[B]GBP[/B]: The 52 and 13 week indexes are at 27 and 83 after being at 2 and 8 2 weeks ago. The analysis for the GBP is the same as that for the Euro; expect strength.
[B]Implications: [/B]Bullish
[B]CHF:[/B] The 52 and 13 week readings are at 76 and 100. The indexes are pointing up (CHF bullish) just a few weeks after indicating a bearish extreme. Expect CHF strength.
[B]Implications: [/B]Bullish
[B]JPY: [/B] The 52 and 13 week COT indexes are at 43 and 25. The 13 week index has remained slightly above 0 (bearish extreme) for much of the last 2 months so we are leaning towards the bull side (USDJPY bearish).
[B]Implications: [/B]Bullish
[B]CAD: [/B]The 25 and 50 week COT indexes are at 0 and 0. A bearish sentiment extreme is in place, indicating that a turn towards CAD strength is probable.
[B]Implications: [/B]Bearish but bottoming
[B]AUD:[/B] The 52 and 13 week COT indexes are at 71 and 33. Expect strength to continue until the indexes are near 100.
[B]Implications: [/B]Bullish
[B]NZD:[/B] The 52 and 13 week COT indexes have remained close to 0 since March. Sentiment towards the NZD has turned from a bearish extreme. The NZD should rally.
[B]Implications: [/B]Bullish