I like them… however, with the number of emails and questions on the material I have presented thus far… I’m holding off on these as they aren’t easy to teach… I’m speaking personally that is. Very good patterns to trade.
GLGT
Thanks for that comment… and I was wondering about that “not following this thread” remark but posts were being made here to suggest otherwise. 
To each his or her own… :o
lol that’s funny… sleep is over-rated I’ve learned. 
Pricecharts.com is the source for the charts I used in the video last night for COT and Sentiment. They offer a free two week subscription… I like them but I am not selling you on them. I want to highlight their charting style as it is to me the best for commodity charts. It’s an excellent source for daily Open Interest in my opinion.
Hope that helps.
GLGT
I think we have our wires crossed! What I meant was, I presume the Futures contracts that you were analyzing in your video are only accessable to people who pay a monthly subscription to special data providing services. We can’t get the Futures contracts data for June without subscribing to a service, right?
Regards
Just checking…
Are your pivots for today(Friday 14th) as follows:
R1: 1.59059
pp:1.58118
S1:1.57405
Yes No?
The charts I used in the video are a subscription service yes… but you are not limited to these… I just like the “look and feel” of their format. I’ve used them for 15 years… old habits any all.
You can access the same daily Open Interest charts for all active futures contract months at Commoditycharts.com 100% Free
Hope That Helps!
GLGT
You must run Pivots on your own feed… my data feed might vary on the high and lows a few pips and cause your numbers to be off a bit. That’s why it’s critical for you to run your own numbers… it’s trading on your data not mine that matters.
Off to sleep… GLGT
That is fantastic, thanks.
ITC with regards to Contango and Backwardation.
In your video when you use the example with the Pound March and June Future contracts the market is backwardated as [B]Futures Prices<Spot Prices/B.
Now i understand that the current spot prices could be bigger than the futures price because of eg: limited supply,currently there is limited supply but in the future there will be a harvest and therefore increased supply.
(Im continuing with your example of wheat)
So as a result this premium or “convinience yield” is a direct result of limited supply therefore increased demand and increased prices.
So my train of thought is that if these commodity producers(commercial traders) reduce their net short positions it must mean that they ABSOLUTLEY expect a increase in prices because by reducing their short position it reduces their hedge of their commodity they are hedging and therefore are at a much higher risk.
so…When open interest declines,commercial traders are reducing their net shorts because they are expecting prices to rise.You can also see this on the COT report by a decrease in short positions.
My first question: Is there a lag?(please refer to attachment open interest)
Does the drop in OI between the 2 horizontal lines refer to a increase in prices at point 1 or 2? As far as im concerned it must relate to point 2(the current rally we are seeing now in the cable) and there must be a lag.
Now i can understand this for a commodity like wheat,sugar,etc but i cant bridge the link with how it relates to currencies. To be more specific the demand and supply side of things.In your video with regards to your pound example,How is the pound “limited in supply at spot” and how will there be an "increased supply"in the future??Maybe one or 2 examples will help.
I haven’t presented everything as it relates to the COT methods… but to answer your inquiry… you want to see a drop in OI by 20% or more… this will indicate Commercials have adjusted postitions to compensate for higher prices in the near future. This sets the stage for the significant price rally higher. So in terms of the “signal” it can lag yes… there is no “lag” in the information derived from the OI vs. CFTC COT Report weekly releases. That was my point.
As it relates to SUPPLY & DEMAND for currencies… while it is true we won’t see a actual supply deminish of a currency so to speak… we can see the demand for the underlying currency as it relates to fundamental factors.
At the most fundamental level, a currency price will change because there is more or less demand for it. More demand means the currency pair will experience a higher price. Less demand means the currency pair price will fall. An example of increased demand for a currency is economic data suggesting a strong economy while demand for a currency could decline if the central bank lowers interest rates. True price movement is based on the demand for the currency. In fact, currencies rally when demand increases.
Basic economic principle of supply shows that the value of a currency will change as the levels of supply rise and fall. A larger supply of a currency will diminish its value and price. A lower supply of a currency will increase its value and price. While the supply side is important, look to the demand factor as the primary moving force behind a currency’s value and price.
For example if the Central Bank Of Japan dumped a large amount of Euros in the market… what would this do to the Supply / Demand for Euro’s? It would provide increased Supply… which offsets demand… as a result… lower Euro in Forex this would reasonably translate to a Lower Eur/Usd price or Shorting opportunity.
Hope this makes it a little clearer…
GLGT
This one is also free and has the current and next contracts on the same page so you can compare them just like ICT showed in his video.
barchart.com/commodityfutures/Currencies
Ok great thanks, and then i presume this would fit in with your Top Down analysis for the day?
And if i might add i think this is a brilliant way of "looking at ground zero"and getting a real idea of what the big boys are thinking when looking at open interest.Thanks for this little bit of insight ITC his could be very handy.Quite brilliant
Im well aware of the demand and supply side of things on a basic level as per above but i find it nitty gritty when looking at data and trying to depict a “reason” as per say why their was increased demand/decreased demand.
Sorry if i wasnt clear but hard to explain ,thanks anyway;)
I think you just have to try and read the economic news if you want to depict the reasons behind what the charts are telling you. I guess that the Jun contracts are cheaper than the Mar contracts as investors are wary about the austerity measures that have been implemented by the UK. At some point these are going to bite into the economy and money will flow out of the UK as a result. Though inflation and potential interest rate hikes by the BOE to try and curb it might act as a counter-balance to this.
Though I guess the beauty of using the charts pointed out by ICT is that we don’t really have to know the actual reasons causing the change but just have to understand what the charts are telling us and try to position accordingly.
Thats more like it thanks for that pipbandit.
Yes would love to see through the “fog”
Yeah I find it interesting to try and see through the fog too though I’ll not claim any great insight yet! I usually read articles in Bloomberg and Reuters from the mainstream media. Quite a lot of their content is from analysts from major financial institutions though so you can probably take a some of it with a pinch of salt perhaps. For an alternative economic view Zerohedge is essential reading in my opinion - just ignore the comments sections as the resident loony brigade is vocal and strong. But the analysis done by Zerohedge itself is often excellent and brings up many points that should be in the mainstream media but aren’t as the governments, Fed and financial institutions would much prefer that they’re not.
Shaunnd…after reviewing the video I can see what you mean about the second decline in Open Interest now. The first decline that was mentioned saw no lag before prices increased, but in the 2nd example the price actually dropped off before rallying up to exactly the same place it was before the OI decline indication. I guess if the price continues to move higher from here, then we can assume that the initial price drop was only a minor blip in the grand scheme of things, but if not, then surely the second indication is no indication at all (which maybe the reason for the 20% rule). Anyway, I would be interested in hearing where you are at with your understanding right now? I guess we just need to wait for more information to emerge, and I trust completely that ICT WILL deliver.
Is anyone else monitoring Cable for a potential Head and Shoulders formation dating back to last summer? It could be argued that the USD index is in a consolidation pattern (79 to 81.5) after its move up from 76, and could be looking to go further. Williams%R is overbought on the Cable Daily chart to boot.
Reasons for hesitation: We still have cable in backwardation, and the US Treasury 2Y,5Y and 10Y have all been declining since the start of the year while UK bonds have been rising.
Great resources, thanks for sharing!
Alishijo in reply to your question (I cannot quote for some reason,when i post i get an “uho error message”??)
I think as ITC said,the 20% rule is a good rule of thumb.
I havent been able to use it due to your holiday on monday but i wil use it this morning in my analysis.
To your second post,
Initially i thought the USDX is range bound,back up towards that high of 81…and thought we would see some weakness in the Cable but the high CPI results of the UK pushed the cable right up to that high of 1.6060 and reversed the USDX back down…
Currently price is range bound at the 1.6000 level.It spent a lot of time around that area yesterday,No real signficant move except that move early morning to 1.6060, but im predicting the cable to slide late this week, early next week,We will have to wait and see
Initially this was the idea behind my trade.After it made the high of 1.6060 i was expecting price to fall back down and test mondays high at 1.5954, and trade upto the 1.6000 level where i would scale out and hopefully let profits run.
My stop was below the essential pivot at 1.5905
So to sum it up these are the details of the trade:
[B]Potential trading area[/B]
I took the trade because there was 3 confluences at the particular area of 1.5950
1.Yesterdays high of 1.5954 (possible area of support)
2.Pivot MR1 at 1.5945
3.50% FIB retracement level (This was drawn from yesterdays low(mondays low) of 1.5834 to the new current intraday high of 1.6059)
[B]Entry[/B]
My entry trigger was at 1.5945 around the areas of confluence above.
[B]Stop Loss[/B]
1.5905 (40 pips)
[B]Take Profit[/B]
1.6000 and 1.6050(just below intraday high)
[B]Trade management rules[/B]
Scale out at 1.6000 as it is a round figure and Pivot MR2 is at 1.6003.
Price is currently finding resistance in that area as it falls from its intraday high of 1.6059.
Once price is above 1.6000 and I have scaled out I will move the stop loss to breakeven.
But… it was getting late(my time) and we were in the New York session and the new Asian Session was approaching but price traded down and tested mondays high,and triggered my trade at 1.5945, Price was at about 1.5960 when i went to bed.
(I was well aware of a [B]retest[/B] of mondays high but what i did was reduce my full take profit to 1.6000 and move my stop upto 1.5935.
I did this because it was late in the trading day and the cable had mostly run its legs for the day as well as me being sleeping I wouldnt be able to monitor the trade.
But price trade down to a new daily low of 1.5931 retesting mondays high and i got stopped out at 1.5935…
Price then traded up to 1.6000 (without me).
Lesson learned… Even though i am only demo trading ITCs method for the time being it has been very succesful,this is my first loss trading this way, You need to take key notes like trade the retest (looking back,if i had waited for price to trade to mondays high,trade up and then RETEST it again i would have had a clean entry.