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]: 24.34% current vs. 35.23% previous. Net position: -30 271 current vs. -26 271 previous.
[B]CAD[/B]: 40.76% vs. 45.65%. Net position: -16 167 vs. -7 452. As we see specs became a lot more bearish on the currency. Looking through the different charts, CAD price action is very mixed.
[B]CHF:[/B] 27.93% vs. 35.70%. Net position: - 17 553 vs. -12 419. Despite the not so good economic outlooks the currency made some nice gains lately because it served as a risk off asset.
[B]GBP[/B]: 48.40% vs. 49.42%. Net position: -2 837 vs. -1 075. Despite the bearish reading, we know that GBP turned around in the last two days of the week. Still, I am disappointed in the British economy, will be only long with it against the weakest currencies. I was bullish on it and it is one of the rare cases when I change my bias. I will either be neutral or bearish on the Pound.
[B]NZD[/B]: 44.24% vs. 49.75%. Net position: -2 384 vs. -100. Like all other commodity currencies, it is also one of the biggest losers in this risk off environment. Conclusions on the bottom.
[B]EUR[/B]: 21.82% vs. 22.83%. Net position: -155 342 vs. -146 212. The price action was very mixed last week, gains are associated with risk sentiment moves.
[B]JPY:[/B] 15.55% vs. 15.31%. Net position: -101 127 vs. -112 551. Well all know the more bullish view is there because of risk aversion and not because of better economic conditions. Looking at price action I tend to think that JPY might have shot all its bullets. I am in two trades already against it but this it the time when I might short it against the board.
[B]USD:[/B] I just leave this part to our index expert, [I][B]Peter[/B][/I].
Trade setups for the week:
We do not have any extreme reading based on net positions and COT index, but we should pay attention on comdolls, especially AUD and NZD. Those of you who like carry trade for long-term trades might see some low bargain prices to buy NZD and AUD. They both lost a lot in risk off environment. I think they lost even more than what their economy suggests. Especially AUD. NZD is really coming to an extreme net position reading. If JPY weakens again, stocks start rising, then we might see a nice comdoll rally. On the other side I have to say the markets are difficult to trade for me lately. It is a lot more difficult to make pips than it was a couple of months earlier. I try to be more cautious. I still check a lot to trade the board against JPY and after this report I see a chance to go long with NZD and AUD. Both of these are long term ideas. Besides that, I will take a look what Balazs has to say as I think with metals and indexes I see more edge at this environment than with spot forex. I am waiting for all your critics and ideas!
FE
PS: yesterday I posted a live trade. We often talked about seeing the big picture but cannot managing the trades good. I thought if I have time I might post some live trades based on my COT findings and fundamental view. Maybe looking at what I did good and bad, discussing the potentials to make these trades better we can all turn better traders with getting better in the managing skills. You can also share your idea on this issue.