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Positions of large speculators according to the COT report as at 4/12/2020

On most major currency pairs, the price has reached strong levels of resistance.

Last week, the decline in total net positions in the USD index continued falling by 300. This decrease is the result of an increase in net long positions by 4,100 contracts, which was, however, offset by an increase in total short positions by 4,400 contracts. The US dollar remains in bearish sentiment.

The total net positions in the euro increased by 1,700 contracts. The increase in positions was also in the pound sterling, which is surprising given that the Brexit agreement has not been negotiated yet. The total net positions increased further in the New Zealand dollar and the Japanese yen.

There was a significant decline in total net positions in the Australian dollar and the Canadian dollar.

 

The positions of speculators in individual currencies

 
Table 1: Total net positions of large speculators
  4.12.2020 27.11.2020
20.11.2020
 
13.11.2020 6.11.2020
30.10.2020
 
USD index -3 100 -2 800 -1 000 -1 100 700 -1 300
EUR 139 900 138 200 134 000 135 300 140 300 155 600
GBP -7 900 -17 100 -19 700 -17 700 -11 200 -6 700
AUD -10 800 -5 300 -6 100 -8 700 -1 300 8 900
NZD 9 100 8 300 8 900 7 700 7 100 7 000
CAD -21 200 -16 800 -20 400 -21 300 -20 700 -18 000
CHF 14 700 15 000 14 900 15 900 14 900 15 500
JPY 47 500 40 200 29 700 41 900 28 100 17 900


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 euro made a strong move up last week and surpassed the 1.950-1.20 resistance level, which has now become a new support. The price has reached another strong level of resistance, where a reaction can be expected.

Total net positions were increased by 1,700 contracts last week. This change is the result of an increase in net long positions by 1,000 contracts and a decrease in net short positions by 700 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. If it is clear that the Brexit agreement will not be concluded, a strong decline can be expected. Negotiations over the weekend did not bring a breakthrough in the negotiations, while the time to negotiate the agreement is rapidly running out.

Last week, total net positions increased by 9,200 contracts. This change is mainly the result of an increase in net long positions by 6,200 contracts, while net short positions decreased by 3,000 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 5th week in bearish sentiment. Last week, total net positions fell by 5,500 contracts. This change is the result of a decrease in net long positions by 6,200 contracts, while net short positions decreased by 700 contracts.

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: 0.7350-0.7400
Long-term support: 0.7000-0.7020
 

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 800 contracts. This change is the result of an increase in net long contracts by 600 and a decrease in net short contracts by 200 contracts.

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

Resistance: 0.7050-0.7100

The nearest support: 0.6920-0.6970

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