Positions of large speculators according to the COT report as at 27/11/2020

Speculators continue to maintain total net positions in bearish sentiment in the USD index, as total net positions fell by 1,800 contracts last week. This decline is the result of an increase in net short positions by 1,800 contracts, which reinforces the importance of overall bearish sentiment in the US dollar.

After eight declining weeks in a row, the total net position in the euro increased by 4,200 contracts. The total net positions in the British pound increased by 2,600 contracts. In this context, we recall that a trade agreement between the EU and the UK, which should resolve the form of Brexit, has not been agreed yet. The main problem for an agreement are fishing rights.

The total net positions increased further in the Australian dollar, the Canadian dollar, the Swiss franc and the Japanese yen.

After seven rising weeks in a row, total net positions in the New Zealand dollar declined.

 

Table 1: Total net positions of large speculators

	27.11.2020	20.11.2020	13.11.2020	6.11.2020	30.10.2020	23.10.2020
USD index	-2 800	-1 100	-1 100	700	-1 300	-1 700
EUR	138 200	134 000	135 300	140 300	155 600	166 000
GBP	-17 100	-19 700	-17 700	-11 200	-6 700	-2 000
AUD	-5 300	-6 100	-8 700	-1 300	8 900	6 800
NZD	8 300	8 900	7 700	7 100	7 000	6 600
CAD	-16 800	-20 400	-21 300	-20 700	-18 000	-19 100
CHF	15 000	14 900	15 900	14 900	15 500	14 400
JPY	40 200	29 700	41 900	28 100	17 900	14 200

Notes:

Large speculators are traders who trade large volumes of futures contracts, which, if the required 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 of long-term trends.

Total net positions are the difference between the number of bullish long contracts and the number of bearish short contracts. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.

The sentiment of large speculators will allow you to see what position this group occupies in the market. It is important to monitor the overall trend of total net positions, but also separately the trend of bearish short positions and the trend of bullish long positions. Extreme values ​​of total net positions are also important as they often serve as signals of a trend reversal.

It is also important to monitor the turning points, when the total net positions change from bullish sentiment to bearish and vice versa. These inflection points are indicated in the graphs in section 3.

Strength of individual currencies for the period of last 3 years

The chart compares the current value of the total net positions of large speculators with the value 3 years ago. A score of 0% means that speculators are at their lowest levels in 3 years. A score of 100% means that speculators are at the highest values ​​in the last 3 years. A value of 80% or more means that speculators are extremely bullish, and a value of 20% or less means that speculators are extremely bearish.
 

Detailed analysis of selected currencies

Explanations:
 

• Purple line and histogram in the chart window: this is information on the overall net position of large speculators.

• Green linein the indicator window: these are the bullish positions of large speculators.

• Red line in the indicator window: indicates the bearish positions of large speculators.
   

If there is a green line above the red line in the indicator window, then it means that the overall net positions are positive, i.e. that bullish sentiment prevails. If, on the other hand, the green line is below the red line, then bearish sentiment prevails and the overall net positions of the big speculators are negative.

Charts are made with the use of www.tradingview.com.

 

Euro

The total net positions of speculators have been in the bullish territory since March 16, 2020. After the total net positions reached an extremely high value of 211,800 contracts on August 31, 2020, speculators began to reduce their positions. At extreme values, there is a possibility of reversing the trend in the price of the instrument. However, we have not seen it yet in the price of the euro. On the weekly chart, the euro has been moving in a sideways trend since August 2020.

After eight weeks of decline, total net positions were increased by 4,200 contracts last week. This change is the result of an increase in net long positions by 2,800 contracts and a decrease in net short positions by 1,400 contracts.

The euro price reached the first level of resistance in the range of 1.1950 - 1.2000. If there were a break, the price could move to further resistance, which is in the range of 1.2150 - 1.2250.

Long-term resistance: 1.1950 - 1.2000

Long-term support: 1.1600 - 1.1650
 

The British pound

The total net positions of large speculators in the British pound are currently in the bearish zone. The bearish sentiment is probably the result of uncertainty about the further development of the Brexit agreement with the EU, which has not yet been negotiated. However, EU negotiators expressed optimism last week that progress was being made in the negotiations. But there is very little time left to finalise an agreement. Progress in this week's negotiations will therefore be highly anticipated news.

Last week, total net positions increased by 2,600 contracts. This change is mainly the result of an increase in net long positions by 3,400 contracts, while net short positions grew by 800 contracts.

Note: we have plotted inflection points in the chart and it can be seen that in some cases the price development did not react according to sentiment. For example, in segment D, where we can notice that although the total net positions were in bullish territory, i.e. that long contracts prevailed, but the price fell down. In this case, it happened that the total net positions at that time were in extreme value, for which the trend may reverse. In addition, the price reached previous resistance.

Long-term resistance: 1.33-1.35. Here, the price has been tested 3 times.

Long-term support: 1.2650-1.2750
 

The Australian dollar

Total net positions in the Australian dollar are in bearish sentiment for the 4th week. Last week, however, total net positions rose by 800 contracts. This change is the result of an increase in net long positions by 2,800 contracts, while net short positions grew by 2,000 contracts.

The Australian dollar is on a weekly chart in an uptrend and it has reached a level of resistance where a reaction could occur. Should a break happen, the price could move to the next resistance around 0.7600 level.

Long-term resistance: 0.7350-0.7400
Long-term support: 0.7000-0.7020
 

The New Zealand Dollar

In the New Zealand dollar, total net positions are still in bullish sentiment, which started on August 17, 2020. Last week, total net positions fell by 600 contracts. This change is the result of an increase in net long contracts by 2,900 and an increase in net short contracts by 3,500 contracts.

The price of the NZDUSD continues to rise. It is moving in a rising wedge on the weekly chart. The price broke through the resistance from last week, which is now a support. Currently, the price is at the next level of resistance.

Resistance: 0.7030-0.7060

The nearest support: 0.6920-0.6970

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