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Positions of large speculators according to the COT report as at 13/11/2020

Last week, speculators reduced their positions in the US dollar, when the total net position in the USD index is negative again and reached - 1,100 contracts.

The positions of large speculators continue to decline in the euro, where it fell for the 7th week in a row. The decline in total net positions also continues in the British pound, where speculators cut their positions for the third week in a row. In this context, we mention that a trade agreement between the EU and the UK, which should resolve the form of Brexit, has not been finalized yet. There was also a further decline in total net positions in the Australian dollar.

There was a strong increase in the total net position in the Japanese yen, where speculators increased their positions for the 4th week in a row. Furthermore, the growth of bullish positions in the New Zealand dollar continued for the 6th week.

The positions of speculators in individual currencies

Table 1: Total net positions of large speculators
 
13.11.2020
 
6.11.2020
30.10.2020
 

23.10.2020
 

16.10.2020
 

9.10.2020
 
USD index -1 100
700
 
 -1 300  -1 700 450 -3 000
EUR 135 300 140 300 155 600 166 000 168 600 174 300
GBP -17 700 -11 200 -6 700 -2 000 -9 800 -11 300
AUD -8 700 -1 300 8 900 6 800 3 900 10 800
NZD 7 700 7 000 7 000 6 600 6 500 5 100
CAD -21 300 -20 700 - 18 000 -19 100 -13 600 -18 000
CHF 15 900 14 900 15 500 14 400 12 200 13 100
JPY 41 900 28 100 17 900 14 200 20 000 21 100

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 overall 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 graph window: this is information on the overall net position of large speculators.
  • Green line in 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 total net positions of speculators in the euro have been in the bullish territory since 16 March 2020. After the total net positions reached an extremely high value of 211,800 contracts on 31 August 2020, speculators began to reduce their positions. At extreme values, there is a possibility of reversing the trend in the price of the instrument. However, we have not seen a significant decline in the euro yet. The euro has been moving in side trend defined by resistance and support level for a couple of weeks now.

Over the last 7 weeks, the total net positions have been declining and are currently at their lowest levels in the last 16 weeks. Last week, positions fell by 5,000 contracts. This decrease is probably due to the development of the coronavirus in Europe and may also reflect uncertainties regarding the trade agreement with the United Kingdom.

The price of the euro is currently approaching the first level of resistance in the range of 1.1950 - 1.2000, where a reaction might occur.

Long-term resistance: 1.1950 - 1.2000
Long-term support: 1.1600 - 1.1650

 

The British Pound

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

The total net positions of the big speculators in the pound are currently in the bearish zone. The bearish sentiment is probably the result of uncertainty about the further development of the Brexit agreement with the EU. Last week, the bearish total net position was further increased by 6,500 contracts. However, the decline in positions has not been reflected in the price of the pound yet. Nevertheless, the pound is approaching the level of resistance, on which the price reacted before and bounced downwards. Similar reaction may happen on this level again.

A key meeting on Brexit should take place this week. There will be a video conference of EU leaders on 19 November 2020, and next week the European Parliament should ratify the agreement with Britain if the negotiators on both sides agree on it. If it is clear that the Brexit agreement between the EU and Britain will not be negotiated, the pound will most likely fall down.

Note: we have plotted inflection points in the graph 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. But 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 in the Australian dollar have fallen further by 7,400 contracts and are in negative territory, where they were last time on September 11, 2020. This is a decline for the second week in a row. The Australian dollar is approaching a level of resistance on which a trend reversal might occur.

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 600 contracts.

The price quickly broke the first barrier of resistance, which has become a support. The price is currently moving to the next resistance.
 

Resistance: 0.6920-0.6970
The nearest support: 0.6780-0.6800

 

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