COT Report Analysis - a thread on market sentiment

Trading Discussion News and Economy
601

Hey fellas…

I appreciate all your input. There was definitely a lot of confirmation to what goes through my mind and then escapes me.

Philip…good stuff man. You have calmed me by your words.
Yes I thought of that also. I’m not gonna put in any new trades till at least Monday, maybe Tuesday.
You also brought up something I’ve been contemplating for a long time. Placing trades before they get there. Like setting up limit trades. See, I only have the opportunity before work to work at that, then at the end of the day I sometimes just don’t have time but to tally the end of day figures (a must for me). Therefore every morning I do have 2 hours to fully immerse myself with my business. I should be looking at the charts and saying to myself “If price goes here (to confirm more of a trend…confirm any of our sentiments…etc…) then I’ll have a buy stop or sell stop in place”. Cause I don’t know what’s gonna happen during the day, US session, and if things turn then there’s nothing I can do about it.
Also, I’ve been wanting more of a mechanical system. With signals. Making my days easier. And I thought I definitely had it with my moto “if it’s trending, I’m in it”. My ++ system. I’m still working on that. Because, as I always say, trending is relative. I just need to figure out what time span to be concentrating on, that is how long to keep them open. I’m finding patience hard to find. Especially when I’m always in touch with what’s going on in the market, but can’t always make trades.

Ok guys…news flash. My broker just popped up a screen to me as to something that happened, with a trade of mine. I told you I have some USD trades still open. Man!!! I just seen my account balance changed like crazy. I don’t know how to log this, under last weeks data, or this coming weeks data. I didn’t do anything today (right now), this was all effects from last week. So, I wrote it down in parenthesis next to my other figures.
Here it is. I am up 7.1%. Maybe that is just what happened over the weekend (gaps). Well, in any case, I closed it all out. I’m starting fresh this week, and that will be either Monday or Tuesday. (watch now the USD will go through the roof)(had 4 open USD ones, against AUD, NZD, EUR, CHF). Not now though. I’m so tired of losing pips. I just took 230 pips off the table.

What was I saying…I don’t know, I forgot.

Oh, one point I do want to say. Referring to MG’s thread. His system is only a methodology. It is supposed to just be a guide. Everyone must tailor it to themselves. Clint showed up there for a while and gave some good stuff. Then he gave a monster of a post about how to go about finding the trend, getting in to it, and getting out. And I don’t think I am promoting his thread at all. The only thing I wanted was for you FE to read that, see if anything agreed with you, (I thought something might), but then that’s it. We all have our own ways of going about placing trades, for how long, how many, why, etc…We will continue our work here with the sentimental work that we just so love to do.

I think we are doing good here FE! It’s only because of you guys that I am learning about the COT. And I love hearing all that. (actually anything with numbers gets me going). Actually I’m learning so much from you guys about so much more.

Been thinking a lot about this though. FE…need you on this one. Is there anyway to see hindsight about the COT? I mean there is always a cause and affect condition. Can we find any cause and affect with their buying and selling? Like if they are buying or selling, can it show up in the market? Even if it’s 2 or 3 weeks down the road. Like we can say at one time…“yep, there it is where the commercials are buying and it looks like this…” And see it on a chart.

Hope you can understand my point on that.

I got to run guys.
We’ll be in touch.

Mike

602

Hey guys…

So I’ll share my trading plan for the week ahead.

I’m looking at following pairs:
1. AUDUSD short
2. EURUSD short /getting back in/
3. NZDUSD short /getting back in/
4. USDJPY long

As you can probably tell I’m rooting for USD still. Although I came across some articles online that so called experts claiming USD rally will soon come to an end. I’ll take my chances. I think the dollar rally will continue given good releases from US , risk aversion conflict in Ukraine just doesn’t seem to end anytime soon at least in the media. All of these seem to be support my bias towards USD.

Like I’ve discussed with FE and Philip, AUD is somewhat bullish however I don’t think it can beat USD for now. It may well beat up other weaker currencies out there but not USD I think. I’m speaking this from all the information that we’ve gathered up to this point guys COT data , sentiment, indicators and trend… but as we all know I’m not sure whats going to take place in the future. We are no fortune tellers. I just hope that the direction where I’ll place these trades will be accurate at least up to the end of the week.

Almost all of the currencies have important data releases scheduled for this week so I will be paying close attention to all of them to see if it confirms my bias I’m thinking of going ahead with AUDUSD short , but first I’ll wait for US data release thats coming out later during NY session and trade balance from AUD. Thats how I will be placing my trades. I will confirm my bias once again with data releases scheduled this week for currencies that I will be trading.

I will soon be back with more guys…

603

[B]Mike…[/B] I see you’re having some dilemma/confusion going on there. Both FE and Philip have given you an excellent advice. I have nothing much to add. But I just wanted to say that I symphatize with you 100%. I think it’s something to do with trending methodology /portfolio/ when that emerges with market sentiment and your stats /especially daily/ it kind of clouds your thinking and you get sidelined , overwhelmed by all that. Its time get it straighened back up Mike! Don’t get off the mainlane. I know its hard considering how much we cover on this thread. Always look at the bigger picture.

And here’s what I have been trying to do. I have been debating much about it all. Trending. Holding trades long term. I hope you can pick up something here. So I’ve reached a conclusion to just set up fixed TP and flexible SL on all of my trades that I enter and I’ll keep it for as long as it hits my TP or SL. Thats shouldn’t take more than a week for as long as I enter trades prior friday. This I guess don’t be considered holding it long term. However I will be getting back on it again if an opportunity presents itself over and over again. Now for this I will be following the specs move.

As for the real deal /long term trades/ I’m thinking how about following the commercials move. As an example Philip is looking to go long CHF in the near future as commercials already hold more than 50% of longs in open interest. They have been buying all the while they have been falling. Now in the near future they’re planning to sell off their longs during rallies. Buy low and sell high. Are you with me Mike? I was thinking we really might be able to hold it for the long term for these kinds of trades. I hope that didn’t confuse you. Its a thought. I have to think it through in detail again.

[B]FE[/B]… I read your private message. And I have to say I agree with your opinion 100%. You always seem to have clear mind and don’t get influenced by things easily. I know I do. And I should look out. It can be dangerous in this game. I have yet to catch up with your posts from the book. We’re really going at quite a speed. Aren’t we ? But I will you did raise some important points earlier about how we shouldn’t look at net position as just negative or positive but changes in extremes.

604

Actually Mike there is. The COT in itself is big players telling us what they are buying. To see that on the chart you might want to have a look at Volume Spread Analysis (VSA). There is a thread on the forum dedicated to it. Although I prefer to look at it on a larget time frame than they do.

The market did gap, it actually gapped past all my entry points. Now I have to wait for pullbacks to enter. Good luck every body

605

Hey all…

This pretty much sums it all up…

[B]Fed head Yellens speech at Jackson hole[/B]

In the five years since the end of the Great Recession, the economy has made considerable progress in recovering from the largest and most sustained loss of employment in the United States since the Great Depression.

More jobs have now been created in the recovery than were lost in the downturn.
–payroll employment in May of this year finally exceeding the previous peak in January 2008
–job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years
–the unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak

She goes on adds while the unemployment rate is picking up at a rapid pace , the depth of damage was rather severe that labour market has yet to fully recover. She discusses how complicated it is to interpret the employment and wage growth data and that Fed shouldn’t rely solely on an indicator but should investigate in detail to further understand the complex relations good indicator doesn’t always mean things are all rosy.

So, what is a monetary policymaker to do? Some have argued that, in light of the uncertainties associated with estimating labor market slack, policymakers should focus mainly on inflation developments in determining appropriate policy.

In present circumstances, with inflation still running below the FOMC’s 2 percent objective, such an approach would suggest that we could maintain policy accommodation until inflation is clearly moving back toward 2 percent, at which point we could also be confident that slack had diminished.

Of course, our task is not nearly so straightforward. Historically, slack has accounted for only a small portion of the fluctuations in inflation

These complexities in evaluating the relationship between slack and inflation pressures in the current recovery are illustrative of a host of issues that the FOMC will be grappling with as the recovery continues
[B]
There is no simple recipe for appropriate policy in this context. As the FOMC has noted in its recent policy statements, the stance of policy will be guided by our assessments of how far we are from our objectives of maximum employment and 2 percent inflation as well as our assessment of the likely pace of progress toward those objectives.[/B]

[B]At the FOMC’s most recent meeting, the Committee judged, based on a range of labor market indicators, that "labor market conditions improved."20 Indeed, as I noted earlier, they have improved more rapidly than the Committee had anticipated.[/B]

[B]Given this assessment and the Committee’s expectation that inflation will gradually move up toward its longer-run objective, the Committee reaffirmed its view "that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after our current asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided [/B]

Here’s the most important part guys…
[B]But if progress in the labor market continues to be more rapid than anticipated by the Committee or if inflation moves up more rapidly than anticipated then increases in the federal funds rate target could come sooner than the Committee currently expects and could be more rapid thereafter.[/B]

So we better keep a close eye on upcoming indicators on USD especially employment/unemployment and inflation rates.

If you want to read more: FRB: Speech–Yellen, Labor Market Dynamics and Monetary Policy–August 22, 2014

606

Nice work Rookie.

Here is some more:
Goldman Sachs themes Yellen Jackson Hole outlook rates 25 August 2014 | ForexLive

607

Hi Mike,

Philip was again very fast and saved some work for me :slight_smile:

One point though. Again, to keep things simple. I am not sure if we really need the cause. We are searching always for the reasons and why it happened. I mean COT tells us what we need. We can see which numbers increased and which one decreased. It is great to know why it happened and I also like to read the news to understand it. However there are so many things going on at the same time. Important is that it happened! I think commercials know so much more than we do that we will never get to know all the reason anyway. Bottom line: we like to understand what is going on which is good, but still keep it as simple as we can.

It was not a question of yours but I have a very easy way to measure current sentiment. It is easy and fast. Click through all your USD charts. All seven of them, the H1 TF. Observe the price action after market open, when the gap occur. Strong currencies will close the gap, weak currencies cannot close it. Weak signals are coming from EUR, CHF, JPY and NZD. Logical to me. Strong came from AUD and GBP. Also logical. The surprise was for me the action of CAD. Their reaction was also strong and I did not expect that one.

608

Hi rookie,

Traders do have a different mind set, goal and interpreting. Since the start of our weekly forecast I do not think there has been an occasion when I have seen a post where I agreed with all trade setups from someone. This time came now. I like all 4 of your setups. I am also in 4 of them. I only do not trade USD/JPY setup. Not because I do not with you, but I am still confused so I stay away. The COT analysis show that the run will be tough from here because extreme levels and the pair comes soon to a very tough resistance. I just do not feel good to go long on this pair even though Koruda made a bearish remark in Jackson hole which is a good indicator that USD/JPY rally will go on. Well, in that case I do not take my share of the cake.

I also like how you approach the short-term speculators following strategy and long-term commercials following strategy. That seems to be the right thing. More than that, I also have the same approach on SL and TP. I have to add though that our strategy is dangerous. We can lose often more with flexible SL than what we can win with a fix TP. The key is though I think to have a very high win rate, which is possible with good analysis and bias.

We will have a tough time with the AUD too! That will be a hell of a battle :slight_smile: I agree with you about AUD/USD. I do not want to go vs. USD. For this reason I chose 3 weak currencies for my AUD long entries. AUD vs. EUR and NZD cannot run very bad in the current situation. CAD shows some strength now. We will see, as you say, we don’t see the future. If 2 trades are winners from three in the long-term then I accept the ratio.

There is one setup I did not write down and I am thinking about to trade: [B]AUD/CHF long[/B]. I want to hear your opinion. This pair has a great negative correlation to EUR/AUD which supports the strong relationship between EUR and CHF. So if EUR seems that week then AUD/CHF looks good too. I think the 0.8500 resistance level can turn into a good support level so I make a buy limit order there.

I can suggest something though. Do not waste your time reading online articles from experts. If you do, then really the very very very best ones who you think you can really trust. I liked that guy from the video whom Philip linked (sorry, do not remember his name). Usually I write examples from my mistakes so I do it this time too. Int he early beginning when I started forex and had no idea about it at all I wanted to trade EUR/USD. I typed different expressions in google to find out which way the currency goes. Well, these great experts said about half of the time to go long and other half to short. Thanks for the help experts! I can also guess that way. So I rather do my own work, decide how I think and I even feel myself better because I do know the reason I go short or long. I think the best is not wasting your time on things like that.

As the others already said, your Jackson Hole post was a good piece of work.

We do look in the last weeks quite a lot on Central Banks speeches. With that in line, we also start to learn the governors, chairmans etc. At this point I am really disappointed with Yellen and start to understand why Forex Gump says critics about her. She does not really say anything important. Every time we have a high expectation and comes nothing. What she says, I could say it next time. As I do believe next time we will hear the same old and boring story again. Carney is better making some hints at least. And my man is Draghi; listening to this guy at least is not a waste of time. No matter what conference he has but he will say something to move many pips there! Even better is that you can quite good forecast the direction of his saying so the pips can end up in the right hands with a good probability:-)

Continue to work and maintain the positive thinking, no matter of losing or winning. This is the right path to beat the market.

609

FE about the AUDCHF; I have been following the pair for quite some time. A buy signal (momentum overcorss) was triggered on my indicator 2 weeks ago. I didn’t take it then because I’m not looking to sell CHF now.

I think your bias is definitely correct. However I’d just tell you to be patient with buying it, especially at these levels. Firstly we are approaching a level of monthly and weekly resistance at 0.85500-87500. The monthly resistance level around the 8600 has never been breached in years. In fact on the monthly chart, you will see how strong that level is (Aug 1 2011)

There were several attempts to break that level around exactly the same time last year (month of August, September, October and November). They all failed.

On the weekly chart we had a double top forming last week, but no divergence was recorded.

I’m not saying it will not break that level, fundamentals certainly are in your favor, I’m just asking you to take your time in considering the trade. Especially that non commercials added their longs in CHF. So may be, just may be, you can buy it at a better price?

What ever you decide to do, good luck.

610

Good morning guys.

I just wanted to begin this week off on the right footing. First of all I wanted to thank you all for listening to me rant about stuff that I just think about. I get a little knocked off, but am calm now. I surely don’t want to cloud this thread with stupid stuff, like how my trading plan should be, my thoughts on so many adjustments to my strategy… I’m sorry… We should stick to the heart and soul of it, the sentiments of the players and the economies. You guys do such a good job with that!!

I’m presently not in the market. I’m gonna wait for some good opportunities this week. Will let you know what I do. With some good explanations of why.

Have you all noticed that all the data that is coming out this week is very Major? There’s only one 2 tier data for the Comms and that is tonight (beginning of Tues 00GMT) for NZD. Other than that, it’s all Major currencies news. So, that tells me there are possibilities for the Majors more than the Comms. Is that right? Or if the news comes out not so good, then the market runs for the Comms? I guess it can go either way.
Let’s not forget that the trend is favoring the Comms. Their looking for a third straight in a row.

I’m watching.

Mike

611

Hey Mike!

I didn’t mean that we shouldn’t talk about our trading plans, adjustments and how things went on this thread as I think it actually accelerates our progress - we’re learning from each others mistakes. It’s always good to look back what worked and what didn’t Mike. I’m learning much and doing a lot of self reflection on my trading method by just reading all of your posts - the evaluation part everyone. I enjoy this part the most. Please don’t be discouraged to post these kinds of posts from time to time. We’re a team after all :wink:

612

Hey FE!

I fully understand why you’re being cautious with USDJPY. I remember Philip mentioning how commercials now have already acquired more than 50% of longs on EUR, CHF and JPY. It somehow keeps playing on the back of my mind.

But I don’t want to be out of this ride with USD just because I’m being too cautious. Being too cautious can hinder your success in trading. I’m speaking this from my own experience. So I’ve decided to just go with it. I am however not neglecting the fact that commercials now hold more than 50% on JPY, CHF and EUR. Like I said I still have that in the back of my mind.

I’ve found a way to counter this, I’ll look for more confirmation - data releases for each. If it confirms I’m in. Double confirmation. On top I’ll look at candlesticks carefully both on daily and 4h /where I’ll make my entries/.

You’ve raised a good point on AUD however FE… that actually got me thinking if I should go ahead with my AUDUSD setup. I’m hoping that USD will have a good week in terms of data releases there’s GDP, initial/continuing jobless claim, core personal consumption expenditure /a way to tell if there’s any wage growth I guess/ high impact releases in the cards for USD.

Your reasoning on going long with AUDCHF seems quite convincing to me especially given the inverse correlation between AUDCHF and EURAUD. I was actually looking at AUDCHF few weeks back as it was trending - uptrend. I’m not sure what you rely on in terms of technicals FE. I do fibs mostly on daily and horizontal S&R. In fact I still have my fibs on AUDCHF daily chart. Though the pair has a potential to trend higher look out for 0.8548 /on my chart/. You can also go long at the end of a pullback. The pair seems to be in a correction now. Once it breaks that level resistance 0.8500 according to your charts. I agree that your set up is valid. If you manage to seize both of these entries you’ll make double if it goes your direction.

But like Philip has said remember that commercials now have more than 50% of longs on CHF, JPY and EUR. I haven’t read Carneys, Koruda or Draghis speech at Jackson hole yet. But I will tomorrow. I have to. I find it highly valuable. Good insight. Saves a lot of time from going through couple of different articles and indicators.

See you around… I have yet to place any trades yet. Keep it updated guys!

613

Hey Rookie I don’t want you to be worried about the more than 50% idea. Yes they have that amount but it just means over the long term (we are talking monthly time frame) we could see a strong rally. Having said that it seems the JPY is already regaining some of the losses of last week.

My point is don’t let that 50% piece of info change your short/medium term bias at all.

614

Hi guys,

Philip,
thanks for the worries and opinion! I also plotted the two resistance. My entry got triggerred on AUD/CHF. I completely agree on the two possible resistance at 0.8550 and 0.8700. I will see what happens at 0.8550. The other one at 0.8700 looks like a lot toughter to break and I might take a profit at 0.8690 if the trade works out until that point. However in case the 0.8700 is broken then I will jump back in.

Mike,
I think the best is when you already make your news trading plans for the week, and decide what do you do in which case, keeping in mind to have the big picture in front of your eyes. That said, I do not think there are too many important events even if the calendar has many tier 1 news. Why is that? Looking at the big picture I do not think that EUR, USD or NZD reports can change the trends, regardless what comes in the news. I do think they can only change the trends in the short-term. In such cases I only look for the reversal plays. Here I mean I hope to see weak USD data so I can get in at a better price again to fade the original negative move. The same goes with NZD and EUR with the other direction. I hope to see positive data to get in again at a better price but this time against the two currencies to fade the original move. The two reports which can be a game changer for me is AUD tier 1 event as I want to see a clearer trend there and CAD GDP for sure as I see some uncertain movement for CAD. Maybe that one will give us a guidance.

rookie,
Thanks for the info. Well, I do not work with fibs so I cannot say information on that one. I know that they are great but I do not use them. Maybe in the near future. I prefer to keep it simple with S/R mostly and confirmation MA (maybe RSI). S/P is my favorite because that is something where it does not matter that much which TF you use. 1.3200 is an important level and every person looks at that one. It does not matter if you are pro or newbie. However I do not want to go into technicals much, my technical knowledge can be developed for sure. I did Fibs for a small time and when I read analysis I realized every person sees these levels differently. If I see a price change I can make later on the Fibs so that it confirms my great Fib analysis. However I do think that I have to start using the 38.2 and 61.8 levels. In these 2 levels I do trust quite a lot. Read what Philip wrote, basically that is my point in AUD/CHF. I do not plan to hold the trade for extreme long-term. As he said the 50% is good to remember but it does not have to affect short- and medium-term trades. I entered right above the 0.8500 and we see if it turns out good or not.

Have a nice day everyone further on.

615

[I]I continue now a new series here, I write here down my own thoughts about my second COT book as I read it. I write down anyway always for myself what I think is important to look it back later, so I decided why not to post it here too? Important: I write down the own words of the author, in the right order as it comes in the book. However I will not structure the different thoughts and do not write down which pages they were. I just want to mention the sentences which I find important for myself. This is not the same value for you as reading the book (hopefully you will all read it when you have the time for it), however it is better than nothing. I also make my own summary in the end of each post.[/I]

[B]Large Traders… Not Quite As Good As You Think[/B]

[I]How do they stay large traders?[/I]
Indeed, one can only ask how this group became large traders and how they can continue in the game with such an apparently poor track record. You need to understand the dynamics of the marketplace to understand what is going on here. Remember how I told you that the large traders are, for the most part, commodity fund managers? That’s the key to getting the real picture of what you have just seen. These fund managers, for the most part, trade in a particular style and it is that style, their way of doing business, that gives what appears to be a very poor performance. I say that because the commodity fund managers are, for the most part, long-term trend followers. Trend followers of this nature don’t just buy one time and wait for the fireworks. Additionally, the stronger the trend becomes the more positions trend followers will have in a market. Since the trend is up they will not sell (their sell or exit comes from a change in trend). They are in for the ride. About this time another group of managers who have a little slower or longer-term trend-following method become buyers and estblish their longs.

See what happened? The stronger the trend was, the more buyers it attracted. So at the end of a trend, there will be numerous funds and large traders long, who still make a profit as their exit point is above their entry point.

The large speculator is typically a large floor trader, a managed futures account, or a small hedge fund. In general, these types of traders are technically oriented trend followers. Since the large speculators category are consistent trend followers and usually overdo it at extremes, we want to “fade” the large speculators, as they are usually wrong.

It you want to get a good long-term view of commodities, it is best to do so from the hedgers’ or commercials point of view. Why is this? The hedgers are the most important. They have access to the cash markets, which gives them a large advantage. They are buying and selling in cash markets every day and thus have a better sense of actual market prices. Hedgers have superior information. They operate from the “smart money” point of view.

[I]When the net position of the large speculators is at an extreme, expect the market to move in opposite direction of the net position of the large speculators. For instance, if the large speculators are net long - and the net position is at an extreme and prices have been moving up - expect the price of the commodity to correct down.[/I]

The large traders can and do make money when they catch a trend move, but such strong trends are rare. I estimate markets are in strong trend moves only about one-third of the time, and even then at some point the commercials come and take control. There is a greater chance that the commercials will be correct. The times we have to be careful are when there are very strong, tight uptrends or downtrends.

[I]Understanding the COT report [/I]
What’s critically important is to realize that not all the longs were put on right then at the end of the trend; the positions were added over the trend move and just naturally will be greater the longer a trend lasts.

The index approach to looking at the large traders
We can use the same math to look at the large traders as we did when we developed the COT index for the commercials or small traders. It’s the exact same formula. The only difference is that when the large traders index is above 80 we want to look for sells, and when it is below 20 we want to look for buys. In essence we want to do the opposite of what the large traders do.

[B]The Facts on Volume[/B]
The net effect of commercials, large traders, and small traders can be expressed in two ways. The first is what traders refer to as volume, the second way is open interest.

[I]Summary[/I]: as you see, I have written a lot more than usually. I do find the issues very important. I think we can conclude that Williams is “very bearish” on his thinking about large speculators :slight_smile: The second chapter is almost empty in my summary. The author said we will continue with this topic. This is not bad to continue because I do not see what was the purpose of this chapter in this book. There was nothing about the COT report and also nothing to write about. I do expect to understand the relationship between the volume chapter an COT soon. If not, then I ask peterma and Philip who read the book and might give us a hindsight. But first lets wait and see what comes in the next chapter!

616

Hey guys.

Very interesting. (As always)

GBP: +5 -0 2
JPY: +5 -0 2
CHF: +4 -0 3
USD: +4 -2 1
EUR: +3 -4 0
AUD: +1 -5 1
CAD: +1 -5 1
NZD: +0 -7 0

Majors took this one. +15. That’s a lot. And you can see this in this next line up.

Majors against Comms.

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

If that’s not along party lines, nothing is.

Notes:

The GBP and JPY were tied.
USD was down against only GBP and JPY.
EUR was down against all Majors, but up against all Comms. Interesting. Is the weakest Major.
CHF was even against USD, GBP, JPY. That’s interesting! There is a divergence with EUR and CHF. Must be a reason for that. (risk off ?)

So, let’s recap what we have been saying this weekend. Well, for me it’s the Comms are on a roll. Looking for 3 in a row this week. Well, their not off to a good start. But, we all know that there will be a comeback day, or 2, or maybe even 3. Maybe we can determine when they will begin a nice run over the other guys. And we can make some pips with them. I will imagine it should begin during an Asian session.

We have been saying the USD is the strongest. Not today, but they only lost against the 2 strong ones today.
So, they are still strong. And we have the CHF. Philip. There you go.
Maybe someone can summarize the big picture today about why the majors were strongest. Or was it the comms just weak?

I think we should keep a running sentiment feel for how the week progresses. Someone paint a picture. I do with the numbers, but there has to be an explanation. And we should keep track as it goes along. I’m sure we’re gonna be having the data become catalysts for movement soon.

Ok guys!
Good night, see you in a few.

Mike

617

Good idea Mike!

I think Ive finally understood how to interpret your data properly. Thanks for the explanation by the way that you posted earler last week I think.

I see stock indeces are up and you are probably almost right about risk off thing. But I’m thinking JPY and CHF will soon loose its gains back to USD and AUD as there isn’t solid economic support for these two that could explain their gains but risk off sentiment.

Here’s an article that I was reading on Ukraine conflict:
“Poroshenko boosts military spending”

“The events of the last months have for us turned into a real war, albeit an undeclared one,” Mr Poroshenko said in a televised speech on Sunday."

BBC News - Ukraine conflict: Poroshenko boosts military spending

And one thing to keep in mind there’s always corrections/pullbacks happening in between trends and ranging market. I still am with USD , AUD and maybe GBP to ride down on EUR, JPY and NZD.

618

Well Mike I can not give an explanation, fundamentally at least, as to why the results are the way they are. I’m with Rookie that this is just a pullback and I will look to sell Yen and NZD at some point.

On CHF I do not think this strength will continue. As Rookie said there seems to be a risk off sentiment (although shouldn’t gold have gone up yesterday?) I also read on Adam Button that the Swiss Central Bank could intervene to decrease the value of CHF against EUR at 1.2086. It is already in the 1.207 area.

However there are long term concerns that there is now a real divergence between CHF and EUR that could, over the long run, make the peg a nuance and an embarrassment to the SNB. However this is just speculation, it is an interesting story to follow nonetheless.

I’m handling CHF with care for this week at least.

619

Hi guys,

Mike,
today you showed me exactly with the second table why I like that one more. That really shows the whole and clear picture to me. Well that was a touch down! Biggest possible difference. About the running sentiment idea: well, my running sentiment idea is made on the weekend and it can hardly be changed. Not because I do not want to be flexible but because looking at the big picture. If you think about it, how often do we see a trend change? Lets say once a year for a pair. That means for the 28 pairs of combination we see one change in every second week. And there are many pairs that we do not even trade often so we might not realize it soon. Or it is ranging so we do not care. The economic reports do not change my sentiment. What changes in short-term my sentiment is [I]geopolitical risk[/I] because that really changes the direction for all currencies and we have to be aware of that. It can mean many hundreds of pips not like a normal report which brings 50-60 pips. Do not get me wrong, I do trade reports because I like taking advantage of it, what I want to say is that regardless the outcome of the reports they do not change the sentiment. And usually we are aware of the few economic report or more press conference which are changing the game. And it does not should be a surprise at all that comms lost. They gained some the last weeks and besides AUD they are not strong. So why should they actually always win? I do think though that they get sometime a temporary big boost when tensions everywhere (mostly in Ukraine) cool down and risk on sentiment comes back. Please read further on as the other answer are in the “rookie” and “Philip” section.

rookie,
JPY and CHF: agree. And if they gain it is short-term.
Pullback is the other thing for you, Mike. As rookie writes it is completely true. I also wrote on the weekend that I entered AUD even though I can expect a pullback, but I can also expect a good start on Sunday night. Well, Sunday night there was a great gap into my direction and came then the pullback too. It has not changed my sentiment at all that comms are 1 day down. Does not have much of a meaning in my opinion.

Philip,
:-)))) I like the reasoning! Do you remember the two post I wrote with links 1-2 weeks ago? My reasoning for no strong CHF was exactly what you write. Switzerland can just not afford to have a too strong CHF vs. EUR. It costs too much money for them. They need the peg. So they act on it. Totally logical. And as I said if EUR goes down then CHF has too go down too. They cannot win it alone. They rely and live on EUR economy. EUR/CHF is a very tight range usually, makes sense to handle it as range trading.

Good luck to everyone!

620

Hi guys,

I can proudly say I found the best, real time sentiment indicator for 3 currency pairs. I follow it since weeks and it always work. It is a bit sad because it is based on fading the small speculators part of the COT report, but it is true. It is however real time and not a lagging indicator. You can master it in 2 minutes and it is really simple to use.

Here are the steps:

  1. Click on the following link (it is my economic calendar):
    Forex Factory

  2. Go to the bottom of the page and look at the Positions/Live account section.

  3. You see what the small traders are doing. Enter always the trades to the opposite direction.

And what do you guys think? Is it simple? Sorry, I am not a mean guy, just wanted to share you because I look at that indicator and it never makes sense to follow these traders. They are really always on the wrong side. I do not think that many small speculators do any kind of research because the bias is somehow always seems to be wrong. So I might use it as a confirmation for my own trades to the other direction.

I hope I could make a smile for you guys in this serious business! Have a great day!

PS: GBP as mostly, disappointed again a couple of minutes ago with Mortgage Approvals.