Academy News Positions of large speculators according to the COT report as at 5/7/2022

Positions of large speculators according to the COT report as at 5/7/2022

Total net speculator positions on the USD index fell by 3,978 contracts last week to 39,251 contracts. Total net speculator positions on the USD index fell for the second week in a row, falling below 40 000 contracts. Overall, the USD index has been in bullish sentiment since July 6, 2021.
Total net speculators positions on the euro fell further for the fourth time in the last five weeks. During this period, speculators total net positions have fallen by gigantic 69,124 contracts and are at their lowest level since November 30, 2021. The euro seems to be heading inevitably towards parity on the USD pair.
There were also declines in total net speculators positions on the British pound, the Australian dollar, the New Zealand dollar, the Japanese yen, the Canadian dollar and the Swiss franc.

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
Jul 07, 2022	39,251	-16,852	-56,208	-47,621	-7,056	-54,445	4,293	-10,135
Jun 28, 2022	43,229	-10,596	-53,118	-42,980	-5,311	-52,570	9,097	-19673
Jun 21, 2022	45,010	-15,605	-63,247	-40,606	-5,423	-58,454	4,105	-8,591
Jun 14, 2022	44476	-6018	-65596	-43254	-6838	-69755	23202	-6808
Jun 7, 2022	37938	50543	-70810	-47896	-19771	-91646	-1062	-16132
May 31, 2022	37538	52272	-74105	-48682	-18724	-94439	-7007	-20458

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
Jul 05, 2022	673772	197138	213990	-16852	2300	7724	13980	-6256	Bearish
Jun 28, 2022	671,472	189414	200010	-10596	-246	-6140	-11149	5009	Weak Bullish
Jun 21, 2022	671,718	195,554	211,159	211,159	-15,605	-15,605	-12289	18591	Bullish
Jun 14, 2022	668164	206986	213004	-6018	-62503	-23262	33299	-56561	Bearish
Jun 07, 2022	730667	230248	179705	50543	24350	-6305	-4576	-1729	Weak bullish
May 31, 2022	706317	236553	184281	52272	-2621	-519	-13861	13342	Bullish
				Total Change	-35,166	-39,934	15,848	-55,782

COT-5-7-22-obr-1

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

The total net positions of speculators last week amounted to -16,852 contracts, down by 6,256 contracts compared to the previous week. This change is due to the growth of long positions by 7,724 contracts and the growth of short positions by 13,980 contracts. This data suggests bearish sentiment as the total net positions are negative while there has been a decline.
Open interest is up by 2,300 contracts in the last week. This shows that the downward movement that occurred in the euro last week was supported by the volume and is therefore a strong price action.
The price continued its strong decline last week and it seems that reaching parity on the EUR/USD pair is only a matter of time. The fundamental reasons for the downtrend are still in place - aggressive Fed policy, a more moderate ECB policy and the ongoing war in Ukraine.
Long-term resistance: 1.0350 – 1.0380
Support: 1.00

The British pound

DatE	Open Interest	Specs Long	Specs Short	Specs Net positions	Change Open Interest	Change Long	change Short	change Net Positions	Sentiment
Jul 05, 2022	240926	39618	95826	-56208	12190	4434	7524	-3090	Bearish
Jun 28, 2022	228736	35184	88302	-53118	470	6714	-3415	10129	Weak bearish
Jun 21, 2022	228266	28470	91717	-63247	-10056	-873	-3222	2349	Weak Bearish
Jun 14, 2022	238,322	29,343	94,939	-65,596	-20,301	-5,275	-10,489	5,214	Weak bearish
Jun 7, 2022	258623	34618	105428	-70810	5742	3830	535	3295	Weak bullish
May 31, 2022	252881	30788	104893	-74105	-983	4852	-1415	6267	Weak bearish
				Total Change	-12,938	13,682	-10,482	24,164

COT-5-7-22-obr-2

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

The total net positions of speculators last week reached 56,208 contracts, down by 3,090 contracts compared to the previous week. This change is due to the growth in long positions by 4,434 contracts and the growth of short positions by 7,524 contracts. This suggests bearish sentiment as the total net positions of large speculators are negative and at the same time there has been a decline in them.
Open interest has risen by 12,190 contracts in the past week, indicating that the move in the pound that occurred last week was supported by the volume and it was therefore weak price action.
The British Pound continued to weaken on the US Dollar pair last week, breaking through the 1.20 level with a strong daily candlestick. Overall, the British pound is in a strong downtrend.
Long-term resistance: 1.2350 – 1.2400. The resistance is also 1.20. Support: 1.1870 – 1.1920

The Australian dollar

DatE	Open Interest	Specs Long	Specs Short	Specs Net positions	Change Open Interest	Change Long	Change Short	Change Net Positions	Sentiment
Jul 05, 2022	146950	27622	75243	-47621	7059	-1265	3376	-4641	Bearish
Jun 28, 2022	139891	28887	71867	-42980	2874	-2858	-484	-2374	Bearish
Jun 21, 2022	137,017	31,745	72,351	-40,606	-5,840	85	-2,563	2,648	Weak bearish
Jun 14, 2022	142857	31660	74914	-43254	-23565	-60	-4702	4642	Weak bearish
Jun 7, 2022	166422	31720	79616	-47896	12761	-1177	-1963	786	Weak bearish
May 31, 2022	153661	32897	81579	-48682	-4954	-3682	-446	-3236	Bearish
				Total Change	-11665	-8957	-6782	-2175

COT-5-7-22-obr-3

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

The total net positions of speculators last week reached 47,621 contracts, down by 4,641 contracts compared to the previous week. This change is due to a decrease in long positions by 1,265 contracts and an increase in short positions by 3,376 contracts. This data suggests bearish sentiment on the Australian dollar, as the total net positions of large speculators are negative while at the same time there was a decline in them in the previous week.
There was an increase in open interest of 7,059 contracts last week. This means that the move that occurred last week was supported by volume and it was therefore a strong price action.
The Aussie dollar is at a level of significant support where a reaction has occurred and the Aussie has strengthened a little in the past week. This is a temporary correction in an overall downtrend.
Long-term resistance: 0.7040 – 0.7070
Long-term support: 0.6760-0.6780

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
Jul 05, 2022	45403	13634	20690	-7056	5066	1914	3659	-1745	Bearish
Jun 28, 2022	40337	11720	17031	-5311	-2552	-2932	-3044	112	Bearish
Jun 21, 2022	42889	14652	20075	-5423	-2,521	-242	-1,657	1,415	Weak bearish
Jun 14, 2022	45410	14894	21732	-6838	-18130	2584	-10349	12933	Weak bearish
Jun 7, 2022	63540	12310	32081	-19771	8406	3131	4178	-1047	Bearish
May 31, 2022	55134	9179	27903	-18724	-4145	-1570	-2167	597	Weak bearish
				Total Change	-11665	-8957	-446	-3,236

COT-5-7-22-obr-4

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

The total net positions of speculators last week amounted to -7,056 contracts, down by 1,745 contracts compared to the previous week. This change is due to an increase in long positions by 1,914 contracts and an increase in short positions by 3,659 contracts. This data suggests that there was bearish sentiment on the New Zealand dollar over the past week, as the overall net positions of large speculators have been negative, while there has been a further decline.
Open interest rose by 5,066 contracts last week. The move in NZD/USD that occurred last week was therefore supported by volume and therefore the move was strong.
The NZD/USD is moving very similarly to the AUD/USD pair in a downtrend and the pair has approached an area of significant support.
Long-term resistance: 0.6360 – 0.6400
Long-term support: 0.6120 – 0.6140

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.

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