COT Report Analysis - a thread on market sentiment

[peterma]

Hi FE,

I have no opinion on commodities other than that on the signs remain positive, the double bottom on the CRB index that formed early this year seems to have signalled a change.

Not surprised at silver jump, remember that Murphy mentioned that it is viewed both as industrial and also as precious, so the precious aspect helped by Gold.

On Gbp, the commercials are buying because it’s cheap, Eur/Gbp providers now offering a rate of 82.00, haven’t seen that number in a long time. The expectation is that we will see them offer 85.00 in the not too distant future (inter bank around 86.50)

The conservative party election will have an immediate Gbp reaction, if Mrs May wins then good chance that Gbp would react positively.

Take care guys.

Edit that - now 82.50

[peterma]

Now within a hair’s breadth, today offering 84.50 - nice.

[ForExchange]

Now within a hair’s breadth, today offering 84.50 - nice.

Hi Peter,

we should always have a week behind us, just like the last one. You made I guess some great trades on EUR/GBP long based on your analysis, I did the same with my NZD/CHF long trades. I was though surprise on the huge GBP losses, as you have stated once, we might be looking for a new, long-term base for GBP pairs. I am still not trading it. If commercials bought GBP earlier, because it was cheap, well, now they can even buy more from it!

Have a great Sunday,
FE

[ForExchange]

I also checked, EUR/GBP is at an important resistance zone, GBP/CHF is at an important support zone (the correlation makes complete sense of course). It will be interesting to observe how it all plays out.

Checked the COT Index for the British Pound to see how my earlier idea of the extreme readings played out. Although there have been some pretty large movements on the scale, but not as radical as I thought and at this time it moves more sideways.

I am checking the readings on a weekly basis for good re-entry opportunities on gold or silver, but we are nowhere near to get a good signal for entering.

[peterma]

Yeah, I anticipate a levelling off now on Eur/Gbp, for a while at least, probably will get to 85.00 during the week - then all the stuff with polls / negotiations to play out.

Where Gbp will ultimately go is anyone’s guess, maybe some more commercial buying in the week ahead, some of them may have held back with the anticipation of the 85.00 price tag.

[peterma]

Btw, one side effect of the falling pound is being felt, although not much reported on.

Wholesale prices will likely see a rise, most news stories refer to the likely rise in fuel costs for the UK, but there are many letters being received giving prior notice of price increases in other spheres of business, from industrials to even mobile phone providers.

Longer term the Boe could see it’s target inflation of 2% arrive earlier than anticipated

[ForExchange]

Longer term the Boe could see it’s target inflation of 2% arrive earlier than anticipated

Which would mean you are long-term bullish on the pound if I am right.

[peterma]

No, this is where fundamentals as we understand them do not apply.

In a situation of unknown as is the current post Brexit, economics are more governed by fear than by reason, the one country springs to mind is Zimbabwe and it’s inflation, not suggesting that the UK will emulate, just thinking how inflation does not mean buying when fear is introduced.

There is a raised level of fear by investors with regard to the UK at present, I cannot see how politicians can alleviate that fear in the immediate future, therefore the outlook for Gbp is negative.

I suspect that the Boe will find themselves between a rock and a hard place, also suspect that they have figured this themselves.

[peterma]

The conservative party election will have an immediate Gbp reaction, if Mrs May wins then good chance that Gbp would react positively.

Gbp is feeling the May effect - the question is how long, Thursday will decide.

[DJEE]

We are at the finish line, hang on!

[B]Step #7[/B]

Copy the data of Silver to replace the other instrument’s.

There you go, you have your database. All that remains is to make it visually pleasing, but that should be something you can do yourself by now.

Hello,

I am new here and I am stuck with the graphs creating with this database. I would be happy if someone help me with the graphs.

thank you in advance,

[ForExchange]

Hello,

I am new here and I am stuck with the graphs creating with this database. I would be happy if someone help me with the graphs.

thank you in advance,

Hi DJEE,

what is your exact question? We might be able to help you. If not, BB is great with excel, he can also, for sure.

FE

[BostonEJ]

Hello,

I am new here and I am stuck with the graphs creating with this database. I would be happy if someone help me with the graphs.

thank you in advance,

By all means, ask away. Someone will be able to help as most have been through this before.

EJ

[peterma]

Now within a hair’s breadth, today offering 84.50 - nice.

That was one month ago, this evening the offer is 85.50 - and so on it goes.

(the May effect has now evaporated)

Targets now being reassessed, next one is 87.00 (88.00 -88.50 interbank), longer term, perhaps around 6 - 9 months is parity - slightly more vague but def in the planning of some commercials.

[ForExchange]

That was one month ago, this evening the offer is 85.50 - and so on it goes.

(the May effect has now evaporated)

Targets now being reassessed, next one is 87.00 (88.00 -88.50 interbank), longer term, perhaps around 6 - 9 months is parity - slightly more vague but def in the planning of some commercials.

Hi Peter,

yes, in the beginning of the year nobody was expecting these levels, I guess this shows perfectly that we have to be flexible as anything can happen in the markets. On the long-term chart we can see that a strong resistance line was broken, we will see how high the pair goes.

You were writing about parity, on my charts that level has never been reached. That would be a new high! Would be very interesting to observe.

Take care,
FE

[ForExchange]

From a COT perspective there is not much to report. There was a EUR long signal a couple of weeks back.

Interesting is however that I listened a longer Larry Williams interview lately and he mentioned a couple of times the big gold selloff. Well, compared to the levels where gold was when the interview was taken it will be hard to imagine how gold could reach in the medium term those lows. I will be watching out for gold and observe how it all develops. Although Larry was tricky, he set a very low target for gold, but he did not say where to sell

[peterma]

Yeah FE,

The exchange providers give a kind of sense of where the rate is headed.

On Tue morning past they were offering 86.00 with mt4 at 87.00 - fairly average.

Wed, Aug 17th, there was a slight knock back, perhaps in anticipation of retail numbers coming up -mt4 86.50

Banks offering 85.50

Then Thurs the big one, the numbers were a ‘surprise’ and price fell 75 pips.

What did the exchange banks do? - nothing, they held at 85.50 - 200sma hr1 is their yardstick, and 100sma the target, both held so it is back to 86.00 on Friday and today.

[peterma]

Thinking ahead I should perhaps note that the interbank rate, or MT4 rate is back to 86.50, the providers are offering 86.00 - thus they either are feeling generous or they expect the interbank rate to rise Monday/Tuesday

[BBalazs]

I’ll come back to the thread as my broker made some commodities available

[ForExchange]

Hi BB and Peter,

I found something interesting in the COT Report that I wanted to share. I checked the GBP Net Positions for the last 20 years and we are at extreme readings. It is vs. the USD and I do not say we should buy right now, but there are some better GBP long term setups vs weaker pairs.

Peter, how do you see this from a fundamental perspective?

Have a nice Sunday guys,
FE

[peterma]

GBP is in a kind of lull, there have been more constructive comments of late from the UK govt on brexit although this morning the pm acknowledges difficulties up ahead.

These difficulties and how they play out will determine the pound direction, instinct tells me more pound selling to come.