Academy News Positions of large speculators according to the COT report as at 1/3/2022

Positions of large speculators according to the COT report as at 1/3/2022

Total net speculator positions in the USD index fell 1,310 contracts last week. This change is the result of 35 contracts increase in long positions and a 1,345 contracts increase in short positions.
Growth in total net speculator positions occurred last week in the euro, the British pound, the Australian dollar, and the Canadian dollar.
Decreases in total net positions occurred in the New Zealand dollar, the Japanese yen, and the Swiss franc.

Following Russia's invasion to Ukraine, markets shifted into risk-off sentiment. This means that especially the euro and the pound are weakening. The Australian dollar and New Zealand dollar are strengthening due to rising prices of commodities that these countries export.

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
Mar 01, 2022	34774	64939	-337	-78336	-14172	-68732	14140	-15248
Feb 22, 2022	36084	59306	-5809	-84080	-11551	-63187	9253	-10987
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

Note: The explanation of COT methodolody is at the 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 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 tradingview.com. The source of numerical data is www.myfxbook.com

The Euro

date	Open Interest	Specs Long	Specs Short	Specs Net positions	change Open Interest	change Long	change Short	change Net Positions	Sentiment
Mar 01, 2022	719975	228385	163446	64939	23293	14190	8557	5633	Bullish
Feb 22, 2022	696682	214195	154889	59306	-5365	-3704	-15429	11725	Bullish
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
				Total change	28093	16484	-23871	40355

COT-1-3-22-obr-1

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 64,939 contracts last week, which is an increase by 5,633 contracts compared to the previous week. This change is due to an increase in long positions by 14,190 contracts and an increase in short positions by 8,557 contracts. These data suggest continued bullish sentiment in the euro.
Open interest, which has increased by 23,293 contracts in the last week, shows that the downward movement that occurred in the euro last week was supported by volume and is therefore strong.
The euro is weakening sharply under the influence of the war in Ukraine and we can see that support levels have not been respected in such a strong trend. In a strong downtrend it is very risky to try to catch the bottom and open bullish long positions.

Long-term resistance: 1.0980 – 1.1010. Next resistance is near 1.1120 – 1.1150.
Support: 1.0640-1.0700

The British pound

date	Open Interest	Specs Long	Specs Short	Specs Net positions	change Open Interest	change Long	change Short	change Net Positions	Sentiment
Mar 01, 2022	211869	47679	48016	-337	23426	5430	-42	5472	Weak bearish
Feb 22, 2022	188443	42249	48058	-5809	-6859	-7902	144	-8046	Bearish
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
				Total change	28635	7919	8009	-90

COT-1-3-22-obr-2

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 reached to -337 contracts, having increased by 5,472 contracts compared to the previous week. This change is due to an increase in long positions by 5,430 contracts and a decrease in short positions by 42 contracts. This suggests bearish sentiment, but it is weak as the total net positions of large speculators increased.
Open interest, which rose by 23,426 contracts last week, means that the fall in the pound that occurred last week was supported by volume and is therefore strong.
Risk off sentiment due to the war in Ukraine continues to weigh on the pound as well as the euro and therefore the pound is weakening strongly.

Long-term resistance: 1.3270-1.3300. Next resistance is near 1.3420 – 1.3440. The resistance is also in the zone 1.3490 – 1.3520.
Support is near 1.3150 – 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
Mar 01, 2022	189667	12720	91056	-78336	-2912	1167	-4577	5744	Weak bearish
Feb 22, 2022	192579	11553	95633	-84080	1	-139	-2753	2614	Weak bearish
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
				Total change	8531	3669	-6449	10118

COT-1-3-22-obr-3

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

The total net positions of speculators last week reached to - 78,336 contracts, up by 5,744 contracts compared to the previous week. This change is due to an increase in long positions by 1,167 contracts and a decrease in short positions by 4,577 contracts. This data suggests a weakening of bearish sentiment in the Australian dollar.
However, last week we saw a decline in open interest by 2,912 contracts. This means that the upward movement that occurred last week in the AUDUSD was weak because new money did not flow into the market.
The Australian dollar has been strengthening strongly recently, which is explained by the rise in the prices of commodities that Australia exports. These commodities include coal, gas and gold.

Long-term resistance: 0.7520-0.7560
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
Mar 01, 2022	50389	10485	24657	-14172	-6247	-6858	-4237	-2621	Bearish
Feb 22, 2022	56636	17343	28894	-11551	-7469	-7580	-5362	-2218	Bearish
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
				Total change	5662	-1127	4714	-5841

COT-1-3-22-obr-4

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 last week reached a value of - 14,172 contracts, having fallen by 2,621 contracts compared to the previous week. This change is due to a decrease in long positions by 6,858 contracts and a decrease in short positions by 4,237 contracts. This data suggests that the bearish sentiment for the NZD continues.

Last week, open interest fell significantly by 6,247 contracts. Therefore, the upward movement in the NZDUSD that occurred last week is not supported by volume and therefore the price action was weak.
The strengthening of the NZDUSD that occurred last week is somewhat surprising given the geopolitical tensions in Ukraine and risk off sentiment. What helped the NZD rise are rising prices of commodities such as milk, which New Zealand produces.

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.

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.