Commitments of Traders
Speculative GBP shorts are slowly getting extreme. The last extreme level that caused the market to reverse from 1.20 to 1.44 was at 144K ( April 2017 ). We are almost at these extreme levels ( 140K ) this week. The missing element is the share of open interest. This metric read 52% this week. We know the GBP futures tend to reverse the trend when the share of Open Interest reaches over 60%. If speculators add more shorts next week on falling open interest, it will be a perfect long signal for GBPUSD. Lets see
Speculators covered 8.6K of their longs. This is after they added 8.9K fresh longs last week. Two weeks of positions are now cancelled out. At the same time they covered only 672 short contracts. They were 46K net short. This was up from being 38K in the previous week and 40K in a week before that. Clearly speculators like to be short Pound futures
Speculators were bearish this week and are approaching an extreme levels. They added 16K new longs and 35K new shorts to their portfolios this week. The short addition was significant and accounted for 30% of their short positions. They increased them from 100K to 130K. They were 58K net short, up from 39K in the previous week. The share of Open Interest jumped from 55% to 63% this week.
Speculators covered only few longs ( 348 ) but added 3K fresh short positions. They were almost 53K net short, up from being 49.5K in the previous week. As tehnet levels of the position didn’t change much compared to the previous week, the short positions as a % of total interest rose to 49.8%. This is the highest level since November last year. Few week before that, in May 2017 speculators held 60 % of all open interest in longs, the price of USDCAD went from 134 to 1.21. Today we are approaching a similar extreme. If this metric will reach over 58%, it will give enough reasons to believe that USDCAD will collapse in major way. Definitely the one to watch out for in the next few weeks.
Open Interest also declined by a whooping 31K. A decrease in open interest on rising prices means the current trend is running out of steam and it will soon reverse. It’s also worth noticing that now speculators hold 46% of the total open interests in short positions. This figure jumped from 31% last week and it is highest since mid April. The “tipping point” for this market comes in at around 55%. If we see this metric increasing in the coming weeks, we can expect the major turn around in this market.
This week speculators became net short. They covered 22K of their long positions and they got 7.8K of fresh shorts. This is a clear bearish outlook from this group and suggests a major shift in the prices of GBP across the board. As of today, speculators are 19K net short. This accounts for 38% of a total open interest, which leaves us with plenty room for the shorts to be added here.
Speculators added 8.5K new longs and left their shorts unchanged. They were 5K net long this week. This is the first time they became net long in JPY futures since early May 2018. This behaviour suggests, the speculators are gearing up for a move down from the resistance at 111.00 – 111.50
Speculators added 9K new long positions and 12.7K new short positions this week. They were 89K net long, which is the lowest since they became net long back in September 2017. It’s worth to note that the Open Interest grew significantly. This week the total open interest was at 576K positions. The highest open interest ever recorded in this market was 608K positions in March this year. This is when the EURUSD topped and collapsed by 1000 pips in three months. Rising open interest on lower prices supports the current downtrend. If we get over 600K, we might start looking at other reversal/extreme signals but for now, sell on rallies is a preferred strategy in the long term
Speculators added 2.5K new longs and 4.7K new shorts this week. They were 23K net short. This is the most net short they have been since 2016. Looking at the rising price action off the support at 0.7450, we see that speculators are getting caught on the wrong side of the market. The price rallies while they are selling AUD Futures. This is one mixed outlook but I am in favour of higher prices in AUDUSD. I expect speculators to catch up very quickly and add more bullish pressure to the price action.
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