Commitments of Traders
I have been expecting a top in this market for few weeks now. Double top + an engulfing candle could finally mark this top. This week speculators covered 20.5K longs and 7K shorts. This is very bearish sentiment from this group. Keep in mind that speculators covered 40K longs in the space of 3 weeks. It accounts for over 12 % of their total long positions.
Cable also topped – as expected. The pair formed an engulfing candle on daily and weekly charts, which is always a reliable bearish signal. The decline in GBPUSD is rather surprising considering that the BOE was very hawkish. In their Quarterly Inflation Report, the central bank upgraded their 2018 and 2019 GDP forecasts and said rates may need to rise earlier and faster than what they had seen in November. Despite that, Cable’s rally to 1.40 didn’t last and the pair closed the week at 1.3830
Speculators showed a strong Yen bullish bias last week. They added whooping 10.5K fresh longs and only 2.3K new shorts. They were 114K net short, down significantly from 122K in the previous week. They are still holding a large portion of the total open interest 62.5%, although it was down from the extreme levels of 66% - 70% was saw in the last few weeks. It suggests there are still plenty positions to be un-winded and the potential to the downside is still large.
Speculators covered only 900 longs ( small adjustment ) and added fresh 2.6K shorts to their portfolios this week. They were 122K net short, up from being 119K in the previous week. They still hold a very large % of the open interest in shorts ( 66.4%). This has been at around this level for over 6 weeks and it indicates that there will be a lot of positions still to unwind, which in turn could send the price of USDJPY down to 99.00.Overall all COT metrics indicate more downside in this market.
Speculators added 2.8K new longs and 2.7K new shorts so nothing really changed in terms of metrics. They were 17.5K net long, unchanged from the previous week. Net speculative positions crossed the 33 weeks moving average to the downside, which is an indication of the SHORT CAD outlook ( long USDCAD ). It suggests higher prices in USDCAD. I will be looking for the price to close above 20 days moving average and I will consider buying it.
There was no much adjustments in Yen futures this week. Speculators covered 2.2K longs and added 1.5K shorts. They were 125K net short, up from 121K in the previous week. This is very over-extended level at which speculators have been in the last few weeks.
This week speculators added whooping 28K new longs. This is after they added 10.5K in the previous week. At the same time they covered 8K shorts. This is very extreme behaviour indeed. They were 127K net long, which is al time high but the share of open interest still remained at around 43%. Overall, despite still low share of Open Interest, the picture painted in EUR futures is fairly bearish. All time high net positions, open interest and the technical resistance might suggest a major reversal in this market.
This week speculators left their long unchanged ( for the 2nd week in the row ) and covered whooping 20K of their shorts.( also 2nd week in the row ) They were 114K net long, highest since 2007. Open Interest bridged 500K ALL TIME HIGH! All elements of a perfect reversal are now in place apart from the share of the Open Interest, which is still low at 40%.
This week speculators added a substantial amount of positions on both sides of the transaction. They added 22.77K fresh longs and 21K new shorts. This is unusual behaviour. Nevertheless, they were 6.4K net long, up from 4.5K in the previous week. They were 2nd consecutive week net long. Open interest crossed 200K mark but is still far from the extreme levels. ( 270K ) meaning there are many orders yet to be created and push the price up.
Open interest came out at 178K, which is a pretty low level. GBP open interest peaked few times this year at 260K level. This means, there could be over 100K new transactions to be added to this market. Given speculators just turned bullish, I would expect they will be a main driver of this bull market in the next few months.
This content is for members only