Academy News Positions of large speculators according to the COT report as at 15/2/2022

Positions of large speculators according to the COT report as at 15/2/2022

Total net speculator positions in the USD index rose by 1,621 contracts last week. This change is the result of an increase in long positions by 1,979 contracts and an increase in short positions by 358 contracts.

Growth in total net speculator positions occurred last week in the euro, the British pound and the New Zealand dollar.

Decrease in total net positions occurred in the Australian dollar, the Japanese yen, the Canadian dollar, and the Swiss franc.

In the event of a Russian invasion to Ukraine, markets would move into risk-off sentiment. This means that investors would sell risk assets, which include stock indices, and shift their resources into assets that are considered as safe havens in such situations, which include US government bonds and gold. In currency terms, this means that the US dollar, the Japanese yen and the Swiss franc in particular could then appreciate in such a situation. Commodity currencies (especially AUD, NZD) might weaken.

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
Feb 15, 2022	35386	47581	2237	-86694	-9333	-66162	12170	-9715
Feb 08, 2022	33765	38842	-8545	-85741	-10366	-59148	14886	-9399
Feb 01, 2022	34571	29716	-23605	-79829	-11698	-60640	18264	-8239
Jan 25, 2022	36861	31560	-7763	-83273	-10773	-68273	12317	-8796
Jan 18, 2022	36434	24584	-247	-88454	-8331	-80879	7492	-10810
Jan 11, 2022	37892	6005	-29166	-91486	-8604	-87525	-7376	-7660

Note: The explanation of COT methodolody is at the end of this 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

Euro

date	Open Interest	Specs Long	Specs Short	Specs Net positions	change Open Interest	change Long	change Short	change Net Positions	Sentiment
Feb 15, 2022	702047	217899	170318	47581	1949	-1074	-9813	8739	Bullish
Feb 08, 2022	700098	218973	180131	38842	14667	5410	-3716	9126	Bullish
Feb 01, 2022	685431	213563	183847	29716	2479	155	1999	-1844	Weak bullish
Jan 25, 2022	682952	213408	181848	31560	-8930	1507	-5469	6976	Bullish
Jan 18, 2022	691882	211901	187317	24584	9589	7540	-11039	18579	Bullish
Jan 11, 2022	682293	204361	198356	6005	4075	5288	-2271	7559	Bullish
				Total change	23829	18826	-30309	49135

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 47,581 contracts last week, up by 8,739 contracts compared to the previous week. This change is due to a decrease in long positions by 1,074 contracts and a decrease in short positions by 9,813 contracts.

Total net speculators positions have increased by 49,135 contracts over the past 6 weeks. This change is due to speculators closing 30,309 short positions and adding 18,826 long positions. This data suggests continued bullish sentiment for the euro.

However, the rising open interest, which increased by 1,949 contracts in the last week, shows the opposite, as the euro fell down last week and this decline is supported by the rising number of open interest contracts. So more bearish traders were in the market. So we have conflicting information here.

The euro weakened slightly last week on fears of an escalation of the conflict between Russia and Ukraine.

Long-term resistance: 1.1461 – 1.15

Support: 1.1280 - 1.1300. Next support is near 1.1220 - 1.1240. A strong support is in 1.1120-1.1140.

The British Pound

date	Open Interest	Specs Long	Specs Short	Specs Net positions	change Open Interest	change Long	change Short	change Net Positions	Sentiment
Feb 15, 2022	195302	50151	47914	2237	-2646	5442	-5340	10782	Bullish
Feb 08, 2022	197948	44709	53254	-8545	13941	15112	52	15060	Weak bearish
Feb 01, 2022	184007	29597	53202	-23605	1967	-7069	8773	-15842	Bearish
Jan 25, 2022	182040	36666	44429	-7763	-1194	-3094	4422	-7516	Bearish
Jan 18, 2022	183234	39760	40007	-247	-17259	9254	-19665	28919	Weak bearish
Jan 11, 2022	200493	30506	59672	-29166	486	4526	-5479	10005	Weak bearish
				Total change	-4705	24171	-17237	41408

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 reached 2,237 contracts last week, up by 10,782 contracts compared to the previous week. This change is due to an increase in long positions of 5,442 contracts and a decrease in short positions of 5,340 contracts.

Total net positions have increased by 41,408 contracts over the past 6 weeks. This change is due to speculators exiting 17,237 short positions and adding 24,171 long positions.

This data suggests bullish sentiment for the pound.

Open interest, which fell by 2,646 contracts last week, is indicating that the bullish price action that occurred in the pound last week was not supported by volume and therefore it is weak.

Risk off sentiment in US equities could have a negative effect on the Pound as well as the Euro, which could then send the Pound towards support which is at 1.3380.

Long-term resistance: 1.3620-1.3640. Next resistance is near 1.3680 – 1.3750.

Support: 1.3490 – 1.3520. A next support is near 1.3320 – 1.3380 and then mainly in the zone near 1.3200.

The Australian dollar

Date	Open Interest	Specs Long	Specs Short	Specs Net positions	change Open Interest	change Long	change Short	change Net Positions	Sentiment
Feb 15, 2022	192578	11692	98386	-86694	-3825	-5631	-4678	-953	Bearish
Feb 08, 2022	196403	17323	103064	-85741	-510	-1512	4400	-5912	Bearish
Feb 01, 2022	196913	18835	98664	-79829	6893	3714	270	3444	Weak bearish
Jan 25, 2022	190020	15121	98394	-83273	8884	6070	889	5181	Weak bearish
Jan 18, 2022	181136	9051	97505	-88454	-4317	-3332	-6364	3032	Weak bearish
Jan 11, 2022	185453	12383	103869	-91486	5346	-249	1871	-2120	Bearish
				Total change	12471	-940	-3612	2672

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 -86,694 contracts, down 953 contracts from the previous week. This change is due to a decrease in long positions of 5,631 contracts and a decrease in short positions of 4,678 contracts. This data suggests continued bearish sentiment on the Australian dollar, which is confirmed by the downtrend.

Total net positions have increased by 2,672 contracts over the past 6 weeks. This change is due to speculators exit of 3,612 short contracts while exiting 940 long contracts at the same time.

However, last week saw a decrease in open interest of 3,825 contracts. This means that the upward price action 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. If the conflict between Russia and Ukraine escalates, we can expect it to weaken especially on the AUDUSD pair and also the AUDJPY.

Long-term resistance: 0.7200-0.7250 and especially near 0.7270-0.7310.

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

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
Feb 15, 2022	64105	24923	34256	-9333	9228	7755	6722	1033	Weak bearish
Feb 08, 2022	54877	17168	27534	-10366	-3590	-2037	-3369	1332	Weak bearish
Feb 01, 2022	58467	19205	30903	-11698	5151	3257	4182	-925	Bearish
Jan 25, 2022	53316	15948	26721	-10773	8589	4336	6778	-2442	Bearish
Jan 18, 2022	44727	11612	19943	-8331	2661	652	379	273	Weak bearish
Jan 11, 2022	42066	10960	19564	-8604	1764	1543	1302	241	Weak bearish
				Celková změna	23803	15506	15994	-488

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 - 9,333 contracts, having increased by 1,033 contracts compared to the previous week. This change is due to an increase in long positions by 7,755 contracts and an increase in short positions by 6,722 contracts. This data suggests that the bearish sentiment for the New Zealand Dollar continues, but has started to weaken over the past week.

Total net positions have declined by 488 contracts over the past 6 weeks. This change is due to speculators adding 15,994 short positions and adding 15,506 long positions.

Open interest rose significantly last week, increasing by 9,228 contracts. The rise in the NZDUSD price action that occurred last week is therefore supported by volume and therefore the move was strong.

The reason for the NZD strengthening last week is that the Reserve Bank of New Zealand is likely to raise interest rates to 1% on Feb 23, 2022. However, if the conflict in Ukraine escalates further, the NZDUSD could more likely weaken. The reason for the NZDUSD's decline from a technical analysis perspective could also be that the NZDUSD price has reached horizontal resistance and also the upper downtrend line from the daily chart.

Long-term resistance: 0.6700 – 0.6740 and then 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.

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.