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Positions of large speculators according to the COT report as at 30/10/2020

Large speculators reduced their bearish total net positions in the USD index last week. The decline in total net positions continued in the euro, where speculators decreased their positions in 5th consecutive week. The decline in total net positions happened also in the British pound. 
On the other hand, the speculators increased total net positions in the Japanese yen and the Swiss franc. Further increase in total net positions continued in the Australian dollar and the New Zealand dollar. 

The positions of speculators in individual currencies

Table 1: Total net positions of large speculators
  30.10.2020
23.10.2020
 

16.10.2020
 

9.10.2020
 

2.10.2020
 

25.9.2020
 
USD index
  -1 300
 
 -1 700 450 -3 000 -5 500 -9 100
EUR 155 600 166 000 168 600 174 300 188 100 190 800
GBP -6 700 -2 000 -9 800 -11 300 -12 700 3 000
AUD 8 900 6 800 3 900 10 800 8 900 16 300
NZD 7 000 6 600 6 500 5 100 4 900 4 900
CAD - 18 000 -19 100 -13 600 -18 000 -18 900 -18 900
CHF 15 500 14 400 12 200 13 100 12 700 15 900
JPY 17 900 14 200 20 000 21 100 24 800 29 600

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 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. 

 

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 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 5 weeks, total net positions were declining and are currently at their lowest levels in 14 weeks. 


The total net positions decreased by 10,400 contracts last week. This decrease is probably due to the development of coronavirus in Europe, which is gradually gaining momentum. The euro declined last week and it has reached the first support level. 


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 large speculators are currently in the pound in the bearish zone. The bearish sentiment increased by 4,700 contracts last week. However, this result is more due to decline in long contracts, which was bigger than decline in short contracts as it can be seen in the indicator window.   

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

The total net positions are still in bullish sentiment in the Australian dollar. Last week, the number of total net positions increased by 2,100. However, the increase is the result of stronger decrease of short positions as we can see in indicator window.

The price was declining last week and reached the first support level. The reason for this price action is the risk-off sentiment before the US presidential elections, which was reflected in the sell-off of American stock indices. 


 
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 in the New Zealand dollar, overall net positions are currently in bullish sentiment, which has been running since August 17, 2020. The total net positions rose by 400 contracts last week. The increase is the result of increase of long positions as we can see in the indicator window. 

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

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