-British Pound only bearish signal
-Bullish signals for Euro, Japanese Yen, and Swiss Franc
The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over a specific number of weeks (either 52 or 13). 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. 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[/B]
[B]US Dollar Index:[/B] Speculative long positions continue to increase as do commercial short positions. Until the 13 week index is at 75. The closer the index is to 100, the less bullish the reading.
[B]Implications:[/B] neutral
[B]
Euro[/B]
[B]EUR:[/B] Speculators are net short and commercials net long. However, the 13 week index is at 0. This indicates that commercials are the longest they have been in 13 weeks and speculators the shortest they have been in 13 weeks. This is bullish for the euro.
[B]Implications:[/B] bullish
[B]
British Pound[/B]
[B]GBP:[/B] Similar to the euro, British Pound speculators are net short and commercials net long. In this case, evidence is bearish because the 13 week index is near 100, indicating that specs are long relative to the last 13 weeks and that commercials are short relative to the last 13 weeks.
[B]
Implications:[/B] bearish
[B]
Australian Dollar[/B]
[B]AUD:[/B] Australian Dollar speculators are net short and commercials net long. The index recently turned up from 17, which is a low enough level to suggest that a pessimism extreme was reached.
[B]
Implications:[/B] neutral
[B]
New Zealand Dollar[/B]
[B]NZD:[/B] New Zealand Dollar speculators are net short and commercials net long. However, the 13 week index is at 0. This warns that the difference between speculative and commercial positioning may need to decline prior to resumption of the trend.
[B]
Implications:[/B] neutral
[B]
Japanese Yen[/B]
[B]
[/B]
[B]JPY:[/B] Speculators are net long Yen and commercials net short Yen. However, the 13 week index is at 0. This indicates that commercials are the longest they have been in 13 weeks and speculators the shortest they have been in 13 weeks. This is bullish for the Yen.
[B]Implications:[/B] bullish (bearish USDJPY)
[B]
Canadian Dollar[/B]
[B]CAD:[/B] Speculators are net short CAD and commercials net long CAD. However, the 13 week index is at 0. This indicates that commercials are the longest they have been in 13 weeks and speculators the shortest they have been in 13 weeks. Increasing from 0 would be bullish for CAD.
[B]
Implications:[/B] neutral
[B]
Swiss Franc[/B]
[B]CHF:[/B] Speculators are short CHF and commercials are long CHF. This is CHF bearish since the difference between the two groups is not large.
[B]Implications:[/B] bearish
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.
Contact at <[email protected]>