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Positions of large speculators according to the COT report as at 23/10/2020

The total net positions in the USD index returned to the bearish territory last week. The decline in overall net positions continued in the euro, the Japanese yen, and the Canadian dollar. Speculators, on the other hand, have increased their overall net position in the British pound, which may come as a surprise given the uncertainties surrounding Brexit. They further strengthened their overall net positions in the Australian and New Zealand dollars.

The positions of speculators in individual currencies

The overall net positions of large speculators are shown in Table 1:
Table 1: Total net positions of large speculators
  23.10.2020
16.10.2020
 

9.10.2020
 

2.10.2020
 

25.9.2020
 

18.9.2020
 
USD index
  -1 700
 
450 -3 000 -5 500 -9 100 -8 200
EUR 166 000 168 600 174 300 188 100 190 800 178 600
GBP -2 000 -9 800 -11 300 -12 700 3 000 2 300
AUD 6 800 3 900 10 800 8 900 16 300 16 200
NZD 6 600 6 500 5 100 4 900 4 900 3 200
CAD -19 100 -13 600 -18 000 -18 900 -18 900 -16 900
CHF 14 400 12 200 13 100 12 700 15 900 12 100
JPY 14 200 20 000 21 100 24 800 29 600 22 900

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 separate 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                         

                                                                                                                                   
  • Purple line 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 have been in the euro in the bullish territory since March 23, 2020. However, the total net positions are at an extreme bullish value. At extreme values, there is a possibility of reversing the trend. Over the last 4 weeks, total net positions have declined and are currently at their lowest levels in 13 weeks. This decrease is probably due to the development of coronavirus in Europe, which is gradually gaining momentum.

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

 

The Brittish pound

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

The overall net positions of large speculators are currently in the pound in the bearish zone, but the overall net positions have been increasing over the last 3 weeks. Last week, there was an increase of 7,800 contracts. This development is surprising given the still unclear situation around Brexit, where there is a real risk of Brexit without agreement.

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

Overall net positions are still in bullish sentiment on the Australian dollar. Last week, the number of total net positions increased by 2,900. 

 
Long-term resistance: 0.7300-0.7400. 

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

Also on the New Zealand dollar, overall net positions are currently in bullish sentiment, which has been running since August 17, 2020. The bullish sentiment continues to grow.

Long-term resistance: 0.6760-0.6800
Long-term support: 0.6500-0.6550
 

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