Commitments of Traders
Meanwhile, speculators , after being rather bearish two weeks ago, took profits on their short positions and become net long once again. Keep in mind the figures in this week’s report are compiled on Tuesday before BOE announcement. Smart Money did not expressed any interest in long positions and covered 680 long contracts. This week’s data is not bullish as such but definitely speculators are not betting on lower Pound post BOE decision and policy stance going forward. My bias remains long.
This week speculators were very stretched from all angles in JPY Futures. For starters they added fresh 5K longs, but t at the same time, they added whooping 20K shorts. They were 116K net short. This is the highest level since July. It brought Open Interest to 282K, highest since December last year. They held almost 63% of the total Open Interest in short. THIS IS EXTREME and suggest reversal.
USDJPY advanced higher and broke the resistance at 113.30. The pair closed the week at 113.50, which is the highest level since mid July 2017. At this stage the price is likely to carry on higher towards the next logical resistance at 114.50.My bias at this stage is flat but I would still expect USDJPY to have limited upside and trade lower in the coming weeks.
Speculators were rather bullish this week but pushed their net longs to extreme levels. They added large amount of long positions 8.7K and at the same time added 1.5K . They were 98K net long, the highest since 2007! Open interest also remains close to the extreme levels. Speculators held 43% of total Open Interest in longs this week. Despite the extreme levels of net positions, speculators are not highly leveraged in longs yet. The last time ( Oct 2016 ) the price reversed, speculators held almost 60% of the total Open Interest in shorts. It seems like there is still room to add more longs before the price reverses.
Speculators, after becoming net bullish on GBP last week, covered another 14K of their shorts last Tuesday. Despite sharply falling prices, speculators are getting rid of their short positions with a bang. In the last 3 weeks they covered 54K shorts, which accounts for 40% of their all shorts held 3 weeks ago. They were 19K net long, up from 5K in the previous week and being net short two weeks ago. Open interest have been falling sharply in the last 3 weeks. This would suggest that the current decline in GBPUSD is a correction and not a trend reversal.
And finally speculators became net long in GBP Futures. This week they covered 11K shorts and added 3.6K new longs. They were 5K net long. This is the first time since Oct 2015 that speculators are net long in GBP Futures. Given uptrending price action, this is a very bullish signal for the British currency. COT analysis had proven many time before the net short/long switch in sentiment among speculators is a clear beginning of a new price trend. Speculative long positions accounted for 41% of the total Open Interest so there is plenty room for the price top go up until the tipping point of 63% is reached. It time to buy GBP!
EURUSD had a good run up and closed the week at 1.2030 after climbing as high as 1.2090, the highest level since 2014. The move was a combination of weak dollar and ECB’s move towards normalisation of monetary policy. Draghi did not announce any taper yet but suggested the bank is now ready to move towards shrinking the balance sheet. They revised GDP forecast up and got lower on inflation target ( no much ). It was a perfect storm for EURUSD to move up. My bias remains long, although net speculative positions are high and open interest is approaching 500K. Given EURUSD is now trading near the major resistance, some correction is likely
This week speculators added a vast amount of longs ( 9.4K ) and 3.3K new shorts. They were 66K net long, highest level since March 2013! They held 66.3% of the total open interest in longs. This is getting close to the tipping point of 67% when the price collapsed back in march 2017. Open interest was also highest since 2015. It seem like the perfect storm for the reversal is playing out.
Speculators were EUR bullish this week. They added new 7.4KJ long contracts and covered 1.2K shorts. They were 87K net long, up from 79K in the previous week and down from the record high of 93K in the week before that. They held 42% of the total Open Interest in longs.This is still far from the expected extreme at around 59%
Speculators were bullish this week. They added 3.5K new longs and at the same time they covered 15K of their shorts. They were 77K net short, down from 95K last week and 112K two weeks ago. In the last five weeks speculators went from being extremely net short @ 126K to hold only 77K net short positions. This is a huge swing and indicate that speculators are becoming more bullish in JPY futures right after being extremely short. This is supportive of the further downtrend in USDJPY below the 108 support.
This content is for members only