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Positions of large speculators according to the COT report as at 11/12/2020

Big speculators have again raised the bearish position in the US dollar. Total net positions in the USD index fell by 3,400 contracts. This change is the result of an increase in net short positions by 2,900 contracts and a decrease in net long positions by 500 contracts. The total net positions in the USD index have been negative for five consecutive weeks.

In the British pound, total net positions are positive for the first time since October 5, 2020, and positions have risen by 13,600 contracts. The increase in positions was also in the euro, where the total net position increased by 16,500 contracts. Speculators probably expect that the Brexit agreement will eventually be concluded. The total net positions also increased in the New Zealand dollar, the Australian dollar, the Canadian dollar and the Japanese yen.

There was a significant decline in total net positions in the Swiss franc last week.

The positions of speculators in individual currencies

 
Table 1: Total net positions of large speculators
  11.12.2020 4.12.2020 27.11.2020 20.11.2020 13.11.2020
6.11.2020
 
USD index -6 500 -3 100 -2 800 -1 000 -1 100 700
EUR 156 400 139 900 138 200 134 000 135 300 140 300
GBP 5 700 -7 900 -17 100 -19 700 -17 700 -11 200
AUD -10 100 -10 800 -5 300 -6 100 -8 700 -1 300
NZD 10 500 9 100 8 300 8 900 7 700 7 100
CAD -20 800 -21 200 -16 800 -20 400 -21 300 -20 700
CHF 10 400 14 700 15 000 14 900 15 900 14 900
JPY 48 200 47 500 40 200 29 700 41 900 28 100


Notes:

Large speculators are traders who trade large volumes of futures contracts, which, if the required limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading of long-term trends.

Total net positions are the difference between the number of bullish long contracts and the number of bearish short contracts. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.

The sentiment of large speculators will allow you to see what position this group occupies in the market. It is important to monitor the overall trend of total net positions, but also separately the trend of bearish short positions and the trend of bullish long positions. Extreme values ​​of total net positions are also important as they often serve as signals of a trend reversal.

It is also important to monitor the turning points, when the total net positions change from bullish sentiment to bearish and vice versa. These inflection points are indicated in the graphs in section 3.

Strength of individual currencies for the period of last 3 years
Figure 1: The strength of currencies according to speculators, source: www.countingpips.com


The chart compares the current value of the total net positions of large speculators with the value 3 years ago. A score of 0% means that speculators are at their lowest levels in 3 years. A score of 100% means that speculators are at the highest values ​​in the last 3 years. A value of 80% or more means that speculators are extremely bullish, and a value of 20% or less means that speculators are extremely bearish.
 

Detailed analysis of selected currencies

Explanations:
 

  • Purple line and histogram in the chart window: this is information on the overall net position of large speculators.

  • Green linein the indicator window: these are the bullish positions of large speculators.

  • Red line in the indicator window: indicates the bearish positions of large speculators.
     

If there is a green line above the red line in the indicator window, then it means that the overall net positions are positive, i.e. that bullish sentiment prevails. If, on the other hand, the green line is below the red line, then bearish sentiment prevails and the overall net positions of the big speculators are negative.

Charts are made with the use of www.tradingview.com.

 

The Euro

Figure 2: The euro and COT positions of large speculators on a weekly chart


The price of the euro fluctuates at a level of strong resistance, at which a reaction can be expected.

Total net positions increased by 16,500 contracts last week. This change is the result of an increase in net long positions by 15,200 contracts and a decrease in net short positions by 1,300 contracts.

Long-term resistance: 1.2150 - 1.2250

Long-term support: 1.1950 - 1.2000
 

The British pound

Figure 3: The GBP and COT positions of large speculators on a weekly chart


Also in the pound sterling, the price is at a strong level of resistance. Price reacts strongly to the events surrounding Brexit. The agreement has not been concluded yet despite the fact that there is very little time left. If it is clear that the agreement will not be concluded, then a sharp drop in the pound can be expected. On Sunday, however, it was agreed that negotiations would continue. The pound responded with strong growth and the price opened after the weekend with a bullish gap of 150 pips.

Last week, total net positions increased by 13,600 contracts. This change is the result of an increase in net long positions by 2,300 contracts, while net short positions decreased by 11,300 contracts.

Note: we have plotted inflection points in the chart and it can be seen that in some cases the price development did not react according to sentiment. For example, in segment D, where we can notice that although the total net positions were in bullish territory, i.e. that long contracts prevailed, but the price fell down. In this case, it happened that the total net positions at that time were in extreme value, for which the trend may reverse. In addition, the price reached previous resistance.

Long-term resistance: 1.33-1.35. Here, the price has been tested 3 times.

Long-term support: 1.2650-1.2750
 

The Australian dollar

Figure 4: The AUD and COT positions of large speculators on a weekly chart


Total net positions are in the Australian dollar for the 6th week in bearish sentiment. Last week, total net positions increased by 700 contracts. This change is the result of an increase in net long positions by 5,200 contracts, while net short positions increased by 4,500 contracts.

The Australian dollar is moving in a rising trend on the weekly chart and last week broke through resistance in the range around 0.7400. Further resistance is at 0.7600.

The Australian dollar is in an uptrend on the weekly chart and has reached a level of resistance where it could react. Should a breakout occur, the next resistance is around 0.7600.

Long-term resistance: 0.7600-0.7650.

Long-term support: 0.7380-0.7420
 

The New Zealand Dollar

Figure 5: The NZD and the position of large speculators on a weekly chart


In the New Zealand dollar, total net positions are still in bullish sentiment, which has been going on since August 17, 2020. Last week, total net positions rose by 1,400 contracts. This change is the result of an increase in net long contracts by 1,900 and an increase in net short contracts by 500 contracts.

The price of NZDUSD continues to rise and is currently at the level of resistance.

Resistance: 0.7150-0.7200

The nearest support: 0.6920-0.6970

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