Positions of large speculators according to the COT report as at 22/2/2022

The Euro

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

The total net positions of speculators reached 59 306 contracts last week, up by 11 725 contracts compared to the previous week. This change is due to a decrease in long positions by 3,704 contracts and a decrease in short positions by 15,429 contracts.
Total net positions have increased by 53,301 contracts over the past 6 weeks. This change is due to the fact that large speculators ended 43,467 short positions and addded 9,834 long positions.  This data suggests continued bullish sentiment for the euro.
Open interest, which fell by 5,465 contracts in the past week, shows that the downward movement that occurred in the euro last week was not supported by the volume and therefore it was a weak decline as there were fewer bearish traders in the market. 
The euro weakened strongly last week under the influence of the war in Ukraine and reached strong support at 1.1120.

Long-term resistance: 1.1280 – 1.1300. Next resistance is near 1.1370 – 1.1400.
Support: 1.1100-1.1140
 

The British pound

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

The total net positions of speculators last week amounted to - 5,809 contracts, down by 8,046 contracts compared to the previous week. This change is due to a decrease in long positions by 7,902 contracts and an increase in short positions by 144 contracts.
Total net positions have increased by 23,357 contracts over the past 6 weeks. This change is due to speculators exiting 11,614 short positions and adding 11,743 long positions.
The decline in total net positions of large speculators into negative territory indicates bearish sentiment for the pound.
Open interest, which fell by 6,859 contracts last week, indicates that the decline in the pound that occurred last week was not supported by volume and was therefore weak.
The pound, just as the euro, might be negatively impacted by risk-off sentiment which could then send the pound towards support which is at 1.3300 or possibly 1.3200.

Long-term resistance: 1.3620-1.3640.  Next resistance is near 1.3680 – 1.3750. The resistance is also in the zone 1.3490 – 1.3520.
Support is near 1.3270 – 1.3300 and then mainly in the zone 1.3200.  
 

The Australian dollar

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

Total net speculator positions last week reached -84,080 contracts, up 2,614 contracts from the previous week. This change is due to a decrease in long positions by 139 contracts and a decrease in short positions by 2,753 contracts. This data suggests a weakening of the bearish sentiment for the Australian dollar, which is confirmed by the downtrend.
Total net positions have increased by 7,406 contracts over the past 6 weeks. This change is due to speculators exiting 8,236 short contracts while exiting 830 long contracts.
However, there was an increase in open interest of 1 contract last week. This means that the upward movement that occurred last week was weak in terms of volume because new money did not flow into the market.
The Australian dollar is very sensitive to the international geopolitical situation. In the event of geopolitical instability, it can usually be expected to weaken especially in the AUDUSD pair and also the AUDJPY. However, last week the Australian dollar surprisingly strengthened and approached the resistance band.

Long-term resistance: 0.7270-0.7310                                                                                                           
Long-term support: 0.7085-0.7120.  A strong support is near 0.6960 – 0.6990.
 

The New Zealand dollar

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

The total net positions of speculators reached a negative value last week - 11,551 contracts, having fallen by 2,218 contracts compared to the previous week. This change is due to a decrease in long positions by 7,580 contracts and a decrease in short positions by 7,580 contracts. This data suggests that the bearish sentiment on the NZ dollar continues.
Total net positions have declined by 2,947 contracts over the past 6 weeks. This change is due to speculators adding 9,330 short positions and adding 6,383 long positions.
Last week, open interest fell significantly by 7,469 contracts. Therefore, the upward movement in NZDUSD that occurred last week is not supported by volume and therefore the move was weak.
The strengthening of the NZDUSD that occurred last week is somewhat surprising given the geopolitical tensions in Ukraine. This upward movement is forming a channel pattern, which may be a correction in the current downtrend trend that we can see on the daily or weekly chart.

Long-term resistance: 0.6850 – 0.6890
Long-term support: 0.6590-0.6600 and the next support is at 0.6500 – 0.6530.
 

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.

• 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.