Positions of large speculators according to the COT report as at 1/2/2022

Total net speculator positions in the USD index fell by 2,290 contracts last week. This change is the result of an increase in long positions by 2,125 contracts and an increase in short positions by 4,415 contracts.
Speculators reduced their positions in the USD index for the third time in the past four weeks after the total net position in the dollar reached its highest level in 117 weeks on January 4, 2022. Since then, total net positions have fallen by 4,507 contracts and are at their lowest level in 7 weeks.
The increase in speculators’ total net positions occurred last week in the Australian dollar, the Swiss franc, the Canadian dollar and the Japanese yen.
The declines in total net positions occurred in the euro, the New Zealand dollar and the British pound.
 

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.
 

	1/2/2022	25/1/2022	18/1/2022	11/1/2022	4/1/2022	28/12/2021
USD index	34 571	36 861	36 434	37 892	39 078	36 789
EUR	29 716	31 560	24 584	6 005	-1 554	-6 634
GBP	-23 605	-7 763	-247	-29 166	-39 171	-50 719
AUD	-79829	-83 273	-88 454	-91 486	-89 366	-81 741
NZD	-11 698	-10 773	-8 331	-8 604	-8 845	-8 421
JPY	-60 640	-68 273	-80 879	-87 525	-62 262	-53 102
CAD	18 264	12 317	7 492	-7 376	-11 025	-10 334
CHF	-8 239	-8 796	-10 810	-7 660	-9 529	-10 718

Table 1: Total net positions of large speculators

 

Note: The explanation of COT and methodolody is in the Appendix 1 that you can find at the end of the 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.

The Euro

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in long positions of speculators	Weekly change in short positions of speculators	Sentiment
1.2.2022	2 479	-1 844	155	1 999	Weak bullish
25.1.2022	-8 930	6 976	1 507	-5 469	Bullish
18.1.2022	9 589	18 579	7 540	-11 039	Bullish

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 28,716 contracts last week, down by 1,844 contracts from the previous week. This change is due to an increase in long positions by 155 contracts and an increase in short positions by 1,999 contracts.
Total net positions have increased by 39,878 contracts over the past 6 weeks. This change is due to speculators exiting 22,910 short positions and adding 16,968 long positions.
This data suggests continued bullish sentiment for the euro. The rising open interest, which has increased by 2,479 contracts in the past week, shows that the bullish price action that occurred in the EURUSD last week is also supported by the rising number of open interest.
The euro strengthened strongly last week on the back of an ECB announcement which sent a hawkish note as the bank said that higher inflation would persist for longer period than initially expected. As a result, the EURUSD reached the strong resistance at 1.1480. The rise in open interest last week suggests that this upward move was strongly bullish and therefore the pressure for further bullish move for the euro might continue. If this resistance is broken, then a further move up to 1.15 and further up to 1.1670 can be expected.
However, the risk to the euro is risk-off sentiment if the sell-off in equity indices continues.

Long-term resistance: 1.1480. Next resistance is near 1.150.
Support: 1.1370 - 1.1380. Next support is near 1.1220 - 1.1240
 

The British Pound   

 

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in long positions of speculators	Weekly change in short positions of speculators	Sentiment
1.2.2022	1 967	-15 842	-7 069	8773	Bearish
25.1.2022	-1 194	-7 516	-3 094	4 422	Bearish
18.1.2022	-17 259	28 919	9 254	-19 665	Weak bearish

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 a negative value last week - 23 605 contracts, having fallen by 15 842 contracts compared to the previous week. This change is due to a decrease in long positions by 7,069 contracts and an increase in short positions by 8,773 contracts.
Total net positions have increased by 34,081 contracts over the past 6 weeks. This change is due to speculators exiting 25,308 short positions and adding 8,773 long positions.
This data suggests continued bearish sentiment for the Pound, which according to the daily chart is in a downtrend.
However, open interest, which rose by 1,967 contracts last week, combined with the rising price of the pound last week, could indicate a change in the situation. We also see some indication of a reversal of the downtrend in the form of higher low that was created on January 28, 2022.
The rise in the pound last week was supported by the Bank of England's decision to raise interest rates to 0.5%. However, some investors were expecting a more aggressive move and therefore the pound's rise was less than the strengthening of the euro, where the ECB's change in rhetoric came as a surprise to markets.
The pound, like the euro, could be negatively affected by risk-off sentiment in US equities, which could then send the pound towards support, which is at 1.3380.

Long-term resistance: 1.3590-1.3620.  Next resistance is near 1.3700 – 1.3750.
Support is at: 1.3330 – 1.3380. The next support is near 1.3300 and then mainly in the zone near 1.3200.
 

The Australlian Dollar

 

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in long positions of speculators	Weekly change in short positions of speculators	Sentiment
1.2.2022	6 893	3 444	3 714	270	Weak bearish
25.1.2022	8 884	5 181	6 070	889	Weak bearish
18.1.2022	-4 317	3 032	-3 332	-6 364	Weak bearish

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 -79,829 contracts, up 3,444 contracts from the previous week. This change is due to an increase in long positions by 3,714 contracts and an increase in short positions by 270 contracts.
Total net positions have increased by 525 contracts over the last 6 weeks. This change is due to speculators exiting 4,648 short contracts while exiting 4,123 long contracts.
This data suggests continuing bearish sentiment for the Australian dollar, which is confirmed by the downtrend. The rising open interest in the current downtrend then indicates the increasing strength of this trend. 
However, overall net positions are starting to grow and there has been a significant increase in long positions of 9,784 contracts in the last two weeks, so this could indicate a change in sentiment is imminent.
There was some strengthening in the Australian dollar last week, but the Aussie weakened towards the end of the week due to risk off sentiment on US indices, which fell towards the end of the week. This risk off sentiment is currently a decisive force for the Australian dollar and if US equities continue to fall, the Australian dollar might also weaken.

Long-term resistance: 0.7130-0.7150 and especially near 0.7270-0.7310.
Long-term support: 0.6960-0.7010
 

The New Zealand Dollar 

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in long positions of speculators	Weekly change in short positions of speculators	Sentiment
1.2.2022	5 151	-925	3 257	4 182	Bearish
25.1.2022	8 589	-2 442	4 336	6 778	Bearish
18.1.2022	2 661	273	652	379	Weak bearish

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 - 11 698 contracts, having fallen by 925 contracts compared to the previous week. This change is due to an increase in long positions by 3,257 contracts and an increase in short positions by 4,182 contracts.
Total net positions have decreased by 5,562 contracts over the past 6 weeks. This change is due to speculators adding 13,717 short positions and adding 8,155 long positions.
This data suggests continuing bearish sentiment in the New Zealand Dollar, confirming the downtrend we can see on the daily chart. The strength of this trend is then confirmed by the rising open interest, which has increased by 5,151 contracts in the last week.

Long-term resistance: 0.6670 – 0.6680 and then 0.6700 – 0.6710.
Long-term support: 0.6500-0.6540

 

Appendix 1: 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.