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Positions of large speculators according to the COT report as at 14/6/2022

Total net speculator positions on the USD index rose by 6,538 contracts last week to 44,476 contracts. This marks the highest speculator positions for the dollar since March 2017.
In addition, there were many other large moves last week. As a reminder, the data is recorded on Tuesday, which in this case means the day before the Federal Reserve's announcement of a 75 basis point increase in the US benchmark rate.
The Canadian dollar (up 24,264 contracts) and the Japanese yen (up 21,891 contracts) led the rise in currency market positions. Total net positions rose further on the New Zealand dollar, the Swiss franc, the British pound and the Australian dollar.
A very significant decline in speculators' total net positions occurred on the euro, where positions fell by 56,561 contracts.

The positions of speculators in individual currencies

The total net positions of large speculators are shown in Table 1: If the value is positive then the large speculators are net long. If the value is negative, the large speculators are net short.

Table 1: Total net positions of large speculators

DatE

USD Index

EUR

GBP

AUD

NZD

JPY

CAD

CHF

Jun 14, 2022

44476

-6018

-65596

-43254

-6838

-69755

23202

-6808

Jun 7,

2022

   37938

50543

-70810

-47896

-19771

-91646

-1062

-16132

May 31, 2022

37538

52272

-74105

-48682

-18724

-94439

-7007

-20458

May 24, 2022

38039

38930

-80372

-45446

-19321

-99444

-12687

-19673

May 17, 2022

36213

20339

-79241

-44642

-17767

-102309

-14496

-16592

May 10, 2022

34776

16529

-79598

-41714

-12996

-110454

-5407

-15763

 

Note: The explanation of COT methodolody is at the the end of the report.
 

Notes:

  • Large speculators are traders who trade large volumes of futures contracts, which, if the set 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 long-term trends and their goal is to make money on speculation with the instrument.
  • The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.
  • The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.
  • When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal.
  • Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.
 

Detailed analysis of selected currencies

 

Explanations:
 

  • Purple line and histogram: this is information on the total net position of large speculators. This information shows the strength and sentiment of an ongoing trend. It is the indicator r_COT Large Speculators (by Kramsken) in www.tradingview.com.
  • Information on the positions of so-called hedgers is not shown in the chart, due to the fact that their main goal is not speculation, but hedging. Therefore, this group usually takes the opposite positions than the large speculators. For this reason, the positions of hedgers are inversely correlated with the movement of the price of the underlying asset. However, this inverse correlation shows the ongoing trend less clearly than the position of large speculators.​
  • We show moving average SMA 100 (blue line) and EMA 50 (orange line) on daily charts.


​Charts are made with the use of www.tradingview.com. The source of numerical data is www.myfxbook.com

 

The Euro

 

DatE

Open Interest

Specs Long

Specs Short

Specs Net positions

Change Open Interest

Change Long

Change Short

Change Net Positions

Sentiment

Jun 14, 2022

668164

206986

213004

-6018

-62503

-23262

33299

-56561

Bearish

Jun 07, 2022

730667

230248

179705

50543

24350

-6305

-4576

-1729

Weak bullish

May 31, 2022

706317

236553

184281

52272

-2621

-519

-13861

13342

Bullish

May 24, 2022

708938

237072

198142

38930

2226

6302

-12289

18591

Bullish

May 17, 2022

706712

230770

210431

20339

1666

2540

-1270

3810

Bullish

May 10, 2022

705046

228230

211701

16529

10120

19781

-3126

22907

Bullish

May 03, 2022

694926

208449

214827

-6378

6477

-14544

14035

-28579

Bearish

       

Total Change

-56561

-1463

-1823

360

 
 

COT-14-6-22-obr-1

Figure 1: The euro and COT positions of large speculators on a weekly chart and the EUR/USD on D1

The total net positions of speculators last week reached to -6,018 contracts, down by 56,561 contracts compared to the previous week. This change is due to a decrease in long positions by 23,262 contracts and an increase in short positions by 33,299 contracts. This data suggests bearish sentiment as the total net positions are negative while there has been a decline in them.
Open interest fell by 62,503 contracts in the last week. This shows that the move that occurred in the euro last week was not supported by the volume and was therefore a weak price action.
The price has bounced off support which is in the band at 1.0400. Overall, the EUR/USD pair is still in a downtrend. The reason for this is the ECB's relatively mild approach towards inflation. The ECB announced to raise the rate by 0.25% from July, which is a much smaller increase than that implemented by the US Fed. 
Long-term resistance: 1.0620 – 1.0650. The next resistance is at 1.0770-1.0780.
Support: 1.0340 – 1.0420
 

The British pound

DatE

Open Interest

Specs Long

Specs Short

Specs Net positions

Change Open Interest

Change Long

change Short

change Net Positions

Sentiment

May 03, 2022

238322

29343

94939

-65596

-20301

-5275

-10489

5214

Weak bullish

Jun 7, 2022

258623

34618

105428

-70810

5742

3830

535

3295

Weak bullish

May 31, 2022

252881

30788

104893

-74105

-983

4852

-1415

6267

Weak bearish

May 24, 2022

253864

25936

106308

-80372

53

-677

454

-1131

Bearish

May 17, 2022

253811

26613

105854

-79241

-10783

-2856

-3213

357

Weak bearish

May 10 2022

264594

29469

109067

-79598

-3902

-4067

1718

-5785

Bearish

       

Total Change

-30174

-4193

-12410

8217

 
 

COT-14-6-22-obr-2

Figure 2: The GBP and COT positions of large speculators on a weekly chart and the GBP/USD on D1

The total net positions of speculators last week reached - 65 596 contracts, having increased by          5 214 contracts compared to the previous week. This change is due to a decrease in long positions by 5,275 contracts and a decrease in short positions by 10,489 contracts. This suggests weak bearish sentiment as the total net positions of large speculators are negative, but at the same time there has been an increase in them.
Open interest fell by 20,301 contracts last week, indicating that the downward movement in the pound that occurred last week was not supported by volume and is therefore weak price action.
The Bank of England raised interest rates by 0.25% last week in line with analysts' expectations. This hike is much more modest than the Fed's aggressive approach, which is why the pound remains under pressure and is moving in a downtrend. Last week, a weekly pin bar candlestick formed on the pound, suggesting the possibility of a temporary correction in the downtrend. 
Long-term resistance: 1.2440 – 1.2476.    

Support: 1.1930 – 1.2000
 

The Australian dollar

 

DatE

Open Interest

Specs Long

Specs Short

Specs Net positions

Change Open Interest

Change Long

Change Short

Change Net Positions

Sentiment

Jun 14, 2022

142857

31660

74914

-43254

-23565

-60

-4702

4642

Weak bearish

Jun 7, 2022

166422

31720

79616

-47896

12761

-1177

-1963

786

Weak bearish

May 31, 2022

153661

32897

81579

-48682

-4954

-3682

-446

-3236

Bearish

May 24, 2022

158615

36579

82025

-45446

-5194

-4894

-4090

-804

Bearish

May 17, 2022

163809

41473

86115

-44642

10600

4604

7532

-2928

Bearish

May 10, 2022

153209

36869

78583

-41714

952

-10126

3072

13198

Bearish

       

Total Change

-9400

-15335

-597

-14738

 
 

COT-14-6-22-obr-3

Figure 3: The AUD and COT positions of large speculators on a weekly chart and the AUD/USD on D1

The total net positions of speculators reached 43,254 contracts last week, up by 4,642 contracts compared to the previous week. This change is due to a decrease in long positions by 60 contracts and a decrease in short positions by 4,702 contracts. This data suggests a weak bearish sentiment on the Australian dollar as the total net positions of large speculators are negative, but at the same time there was an increase in the previous week.
Last week saw a decline in open interest of 23,565 contracts. This means that the downward movement that occurred last week was not supported by the volume and was therefore a weak price action.
The Australian dollar is moving in a downtrend. However, last week it reached a significant support level and we can see that further downside move was rejected at this level. Thus, there could be a temporary correction in the downtrend.
Long-term resistance: 0.7250-0.7260                                                                                                              

Long-term support: 0.6830-0.6850  (the support zone begins at 0.6930 according to a weekly chart).
 

The New Zealand dollar

 

DatE

Open Interest

Specs Long

Specs Short

Specs Net positions

Change Open Interest

Change Long

Change Short

Change Net Positions

Sentiment

Jun 14, 2022

142857

31660

74914

-43254

-23565

-60

-4702

4642

Weak bearish

Jun 7, 2022

63540

12310

32081

-19771

8406

3131

4178

-1047

Bearish

May 31, 2022

55134

9179

27903

-18724

-4145

-1570

-2167

597

Weak bearish

May 24, 2022

59279

10749

30070

-19321

-1525

-4249

-2695

-1554

Bearish

May 17, 2022

60804

14998

32765

-17767

4569

-205

4566

-4771

Bearish

May 10, 2022

56235

15203

28199

-12996

5391

-2224

4162

-6386

Bearish

       

Total Change

17030

-9775

10062

-19837

 
 

COT-14-6-22-obr-4

Figure 4: The NZD and the position of large speculators on a weekly chart and the NZD/USD on D1

Total net speculator positions last week reached -6,838 contracts, up 12,933 contracts from the previous week. This change is due to an increase in long positions of 2,584 contracts and a decrease in short positions of 10,349 contracts. This data suggests that there has been a weakening of bearish sentiment on the New Zealand dollar over the past week, as the total net positions of large speculators are negative, but there has also been an increase in them.
Open interest fell by 18,130 contracts last week. Thus, the downward movement in the NZD/USD that occurred last week was not supported by the volume and therefore the move was weak.
The NZD/USD bounced off the support band at 0.6220. As with the Aussie dollar, the pair is in a downtrend. A rejection of further decline at that support could suggest the possibility of a temporary correction of this bearish trend.
Long-term resistance: 0.6540 – 0.6570
Long-term support: 0.6190 – 0.6220
 

Explanation to the COT report

  • The COT report shows the positions of major participants in the futures markets. Futures contracts are derivatives and are essentially agreements between two parties to exchange an underlying asset for a predetermined price on a predetermined date. They are standardised, specifying the quality and quantity of the underlying asset. They are traded on an exchange so that the total volume of these contracts traded is known.

 

  • Open interest: open interest is the sum of all open futures contracts (i.e. the sum of short and long contracts) that exist on a given asset. OI increases when a new futures contract is created by pairing a buyer with a seller. The OI decreases when an existing futures contract expires at a given expiry time or by settlement.
  • Low or no open interest means that there is no interest in the market. High open interest indicates high activity and traders pay attention to this market. A rising open interest indicates that there is demand for the currency. That is, a rising OI indicates a strong current trend. Conversely, a weakening open interest indicates that the current trend is not strong.

Open Interest

Price action

Interpretation

Notes

Rising

Rising

Strong bullish market

New money flow in the particular asset, more bulls entered the market which pushes the price up. The trend is strong.

Rising

Falling

Strong bearish market

Price falls, more bearish traders entered the market which pushes the price down. The trend is strong.

Falling

Rising

Weak bullish market

Price is going up but new money do not flow into the market. Existing futures contracts expire or are closed. The trend is weak.

Falling

Falling

Weak bearish market

Price is going down, but new money do not flow into the market. Existing futures expire or are closed, the trend is weak.

 

  • Large speculators are traders who trade large volumes of futures contracts, which, if the set 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 long-term trends and their goal is to make money on speculation with the instrument. Traders should try to trade in the direction of these large speculators.
  • The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.
  • The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.
  • When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal.
  • The COT data are usually reported every Friday and they show the status on Tuesday of the week.
  • Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.

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