Special Thread: COT Data Analysis & Trading Signals

Thank you very much, i really learn alot

Non-Commercial COT Data | as of (4/16/24)


Market Dynamics: Insights from the COT Report (4/16/24)

Markets reveal their secrets. COT data, as of April 16, 2024, unveils these secrets, showcasing the positions of various traders.
Focusing on non-commercial traders, often seen as speculative, we uncover a range of sentiments. The Canadian and Australian Dollars face bearish outlooks, with net short positions surpassing 40% of open interest. This negativity is amplified by the growth in their net short positions, signifying rising pessimism. Conversely, Gold and Silver hold onto bullish sentiment, exceeding 30% of open interest in net long positions. Yet, slight dips in these positions hint at a possible easing of this bullishness. WTI Crude Oil also leans bullish, boasting a 26.5% net long position, bolstered by a minor increase, suggesting growing optimism among speculative players. Overall, COT data paints a picture of diverse market sentiments, with some markets leaning bearish while others maintain or slightly temper their bullish stances.

I really appreciate your content on this thread. Can I make a request? Can you teach us how to use the report properly?

Like a Summary how to use it. For example, open interest was one thing that I never look into. But I saw you reference in this last posts. Spreads the same thing.

Anyway, thanks for valuable information that you give all weeks.

MwlRCT

Open Interest:

1. Rising Open Interest with Increasing Net Positions: This combination strengthens the directional bias indicated by the non-commercial positions, suggesting growing market participation and conviction.
2. Falling Open Interest with Increasing Net Positions: This can indicate a weakening trend, as it suggests less participation despite a growing directional bias.

1. Increasing Net Long Positions: If non-commercial traders are consistently increasing their net long positions over time, it suggests a growing bullish sentiment and a potential upward bias for the market.
2. Increasing Net Short Positions: Conversely, consistently increasing net short positions among non-commercial traders indicate a bearish sentiment and a potential downward bias.

As example lets analyse GBPUSD (How to use):

GBPUSD COT Report Analysis: April 16, 2024

Net Bias for GBPUSD: The COT data suggests a slightly bullish bias for GBPUSD, primarily driven by a more pronounced reduction in net short positions for GBP compared to USD.

Individual Currency Analysis:
| Currency | Net Position | Change in Position | Open Interest Trend | Total Open Interest | Net Position as a % of Open Interest | Non-Commercial Long Contracts | Non-Commercial Short Contracts |
|---|---|---|---|---|---|---|
| GBP | 8,619 | -19,633 | Stable | 229,420 | 8.5% | 71,800 | 63,181 |
| USD | -929 | 213 | Stable | 44,069 | -1.1% | 29,911 | 30,840 |
GBP:

1. Non-Commercial:
   1. Net Position: Slightly Long bias
   2. Net Position as a Percentage of Open Interest: 8.5%
   3. Changes in Positioning: Net position decreased by 19,633 contracts, indicating a slight reduction in bullish sentiment.
   4. Open Interest Trends: Stable
   5. Total Open Interest: 229,420 contracts
   6. Non-Commercial Long Contracts: Decreased by 9,419 contracts (-11.55%)
   7. Non-Commercial Short Contracts: Decreased by 10,214 contracts (-13.94%)

   
   
   

USD:

1. Non-Commercial:
   1. Net Position: Slightly Short bias
   2. Net Position as a Percentage of Open Interest: -1.1%
   3. Changes in Positioning: Net position increased by 213 contracts, indicating a slight increase in bearish sentiment.
   4. Open Interest Trends: Stable
   5. Total Open Interest: 44,069 contracts
   6. Non-Commercial Long Contracts: Increased by 3,178 contracts (11.83%)
   7. Non-Commercial Short Contracts: Increased by 2,965 contracts (10.59%)

   
   
   

Implications for GBPUSD:

1. Potential Direction: While both GBP and USD saw a reduction in their net long positions, the decrease was more significant for GBP. This, combined with the slightly short bias for USD, suggests a potential upward movement for GBPUSD.
2. Volatility: The decrease in net long positions for both currencies could indicate a potential decrease in volatility for GBPUSD in the short term. However, the overall open interest remains relatively stable, suggesting continued market participation and the possibility of future volatility spikes.
3. Market Depth: The combined open interest for GBP and USD futures indicates a healthy level of liquidity for the GBPUSD pair, which should support efficient trade execution.

Trading Recommendations:

1. Short-term traders: Consider taking a cautiously bullish stance on GBPUSD, with tight stop-loss orders in place to manage risk due to the potential for unexpected volatility.

Significance of "Changes in Open Interest Distribution": This section holds significant importance for understanding market dynamics and potential sentiment shifts.

Identify Sentiment Shifts:

1. Non-Commercial Long % Up: Potential bull sentiment, prices may rise.
2. Non-Commercial Short % Up: Potential bear sentiment, prices may fall.
3. Long/Short Shifts: Reveal evolving speculation, suggest trend changes.

Relative Positioning:

1. Open Interest Distribution (Commercial vs Non-Commercial) shows influence.
2. Higher Non-Commercial %: More speculative impact on prices.

Contextualize Net Positions:

1. Analyze alongside net position changes for a more complete picture.
2. Example: Net short decrease + Non-Commercial long increase = Stronger bull signal.

GBP

JPY

EUR

AUD

NZD

Thanks for the info
Based on above, what's the forecast for AUDJPY for next week?
This pair has recently experienced a huge bullish move almost all last week.
Is that over now or move bullish is expected?
Thanks

USD

AUDJPY - Non-Commercial COT Analysis and Trading Recommendations

This report analyzes the Non-Commercial COT data for the AUDJPY currency pair as of April 23, 2024, to identify potential trading opportunities based on speculative sentiment.

Key Individual Currency Sentiment:

1. Australian Dollar (AUD):
   1. Non-Commercial:
      1. Net Position: Strong Short bias
      2. Net Position as a Percentage of Open Interest: -41.2%
      3. Changes in Positioning: Relatively flat
      4. Open Interest Trends: Increasing
      5. Total Open Interest: 239,278

   2. Non-Commercial Long Contracts: Minor increase (2.5%)
   3. Non-Commercial Short Contracts: Small decrease (2.6%)

2. Japanese Yen (JPY):
   1. Non-Commercial:
      1. Net Position: Strong Short bias
      2. Net Position as a Percentage of Open Interest: -53.5%
      3. Changes in Positioning: Relatively flat
      4. Open Interest Trends: Increasing
      5. Total Open Interest: 336,167

   2. Non-Commercial Long Contracts: Moderate decrease (14.2%)
   3. Non-Commercial Short Contracts: Slight increase (3.4%)

Implications for AUDJPY:

1. Potential Direction: The strong short bias in both AUD and JPY by non-commercial traders suggests a potential downside bias for the AUDJPY currency pair. This indicates that speculative traders are leaning towards a weakening of the Australian Dollar relative to the Japanese Yen.
2. Volatility: The increasing open interest in both currencies suggests potential for increased volatility in AUDJPY. This could be due to heightened speculative activity and potential unwinding of positions.
3. Market Depth: The high total open interest for both AUD and JPY indicates high market depth, which should provide sufficient liquidity for trade execution.

Trading Recommendations:
Based on the Non-Commercial COT data analysis, here are two potential trading recommendations for AUDJPY:

1. Scenario 1: Short Trade
   1. Rationale: The strong short bias in both AUD and JPY suggests a potential downtrend in AUDJPY.
   2. Entry: Consider a short entry on AUDJPY if price action weakens and breaks below a key support level.
   3. Stop Loss: Place a stop-loss order above a recent swing high to limit potential losses.
   4. Target: Target a potential profit level based on technical analysis or a defined risk-reward ratio.

Important Considerations:

1. COT data is a one-sided view of the market and should be used in conjunction with other technical and fundamental analysis.

Disclaimer: This report provides information for educational purposes only and should not be considered investment advice.

Non-Commercial COT Analysis: XAUUSD - Week Ending (April 23, 2024)

Net Bias:

1. XAUUSD: Exhibits a Bullish net bias based on Non-Commercial COT positioning. This represents a continuation of the previous week's sentiment. This represents a net 41.1% bullish bias for XAUUSD, calculated as the difference between the Net Position as a Percentage of Open Interest for XAU and USD.

Key Individual Currency Sentiment:

1. XAU (Gold):
   1. Non-Commercial:
      1. Net Position: Long bias
      2. Net Position as a Percentage of Open Interest: 42.7%
      3. Changes in Positioning: Slight increase in long positions (0.3%) and a slight decrease in short positions (-0.3%).
      4. Open Interest Trends: Decreasing trend compared to the previous week.
      5. Total Open Interest: 516,249 contracts
      6. Non-Commercial Long Contracts: Increase of 758 contracts (0.3% increase)
      7. Non-Commercial Short Contracts: Decrease of 210 contracts (-0.3% decrease)

   2. Commercial:
      1. Net Position: Short bias

2. USD (US Dollar Index):
   1. Non-Commercial:
      1. Net Position: Short bias (slightly)
      2. Net Position as a Percentage of Open Interest: -0.4%
      3. Changes in Positioning: Increase in both long (4.8%) and short (2.3%) positions, with shorts increasing more.
      4. Open Interest Trends: Increasing trend compared to the previous week.
      5. Total Open Interest: 45,725 contracts
      6. Non-Commercial Long Contracts: Increase of 1,436 contracts (4.8% increase)
      7. Non-Commercial Short Contracts: Increase of 720 contracts (2.3% increase)

   2. Commercial:
      1. Net Position: Long bias

Implications for XAUUSD:

1. Potential Direction: The bullish sentiment in gold and the slight bearish sentiment in the US dollar suggest that XAUUSD may continue its upward trend.
2. Volatility: Potential for moderate volatility in XAUUSD due to the continued bullish positioning in gold and the relatively balanced positioning in the US dollar.
3. Market Depth: The total open interest for both gold and the US dollar index indicates moderate to high liquidity, which should support relatively smooth price movements and efficient trade execution.

Trading Recommendations:

1. Long XAUUSD: Consider opening or adding to long positions in XAUUSD based on the bullish COT data and the potential for further upward movement.
2. Utilize Trailing Stops: Implement trailing stops to protect profits and manage risk as the price of XAUUSD potentially moves higher.
3. Monitor USD and Gold Sentiment: Continue to monitor changes in non-commercial positioning for both gold and the US dollar, as shifts in sentiment could impact the direction and volatility of XAUUSD.

Multi-Pair COT Analysis: GBPCAD, USDCAD, USDCHF - Week Ending (April 23, 2024)

This analysis will dissect the Non-Commercial COT data for GBPCAD, USDCAD, and USDCHF to uncover potential trading opportunities and assess the overall sentiment surrounding the Canadian Dollar (CAD) and its interaction with the British Pound (GBP), US Dollar (USD), and Swiss Franc (CHF).
Individual Currency Analysis:

1. CAD (Canadian Dollar):
   1. Non-Commercial:
      1. Net Position: Short bias across all three pairs (GBPCAD, USDCAD, USDCHF).
      2. Net Position as a Percentage of Open Interest: -32.8% (GBPCAD), -41.2% (AUDCAD)
      3. Changes in Positioning: Slight decrease in both long and short positions for GBPCAD and AUDCAD.
      4. Open Interest Trends: Decreasing trend for GBPCAD, increasing trend for AUDCAD.
      5. Total Open Interest: 226,747 (GBPCAD), 239,278 (AUDCAD)
      6. Non-Commercial Long Contracts: Decrease for both GBPCAD (-3.2%) and AUDCAD (2.5%)
      7. Non-Commercial Short Contracts: Decrease for both GBPCAD (-6.3%) and AUDCAD (-2.6%)

   2. Commercial:
      1. Net Position: Long bias across all three pairs, acting as a counterbalance to the Non-Commercial short positioning.

2. GBP (British Pound):
   1. Non-Commercial:
      1. Net Position: Short bias in GBPCAD (-26.2%).
      2. Changes in Positioning: Significant decrease in long positions (-48.2%) and a notable increase in short positions (18.3%).
      3. Open Interest Trends: Increasing trend.
      4. Non-Commercial Long Contracts: Sharp decline of 23,341 contracts (-48.2% decrease).
      5. Non-Commercial Short Contracts: Increase of 11,511 contracts (18.3% increase).

   2. Commercial:
      1. Net Position: Long bias, but less pronounced compared to CAD's commercial positioning.

3. USD (US Dollar):
   1. Non-Commercial:
      1. Net Position: Mixed. Slightly short in USDCAD (-0.4%) and more significantly short in USDCHF (-42.6%).
      2. Changes in Positioning: Increase in both long and short positions for USDCAD, with shorts increasing more. For USDCHF, a significant drop in long positions (-51.3%) and a slight increase in shorts (2.7%).
      3. Open Interest Trends: Increasing for USDCAD, also increasing for USDCHF.
      4. Non-Commercial Long Contracts: Increase of 1,436 contracts (4.8% increase) for USDCAD, but a sharp decrease of 4,969 contracts (-51.3%) for USDCHF.
      5. Non-Commercial Short Contracts: Increase of 720 contracts (2.3% increase) for USDCAD and a smaller increase of 1,381 contracts (2.7%) for USDCHF.

   2. Commercial:
      1. Net Position: Long bias in USDCAD, but a Short bias in USDCHF, highlighting differing sentiment dynamics.

Inter-Pair Analysis and Trading Recommendations:

1. GBPCAD: The significant increase in GBP shorts and the decrease in longs, coupled with the overall short positioning in CAD, suggests a potential bearish continuation for GBPCAD. Consider opening or adding to short positions while managing risk with stop-loss orders.
2. USDCAD: The situation is less clear-cut. While USD exhibits a slight net short bias and CAD maintains its short positioning, the increasing open interest in USDCAD could indicate potential upcoming volatility. A more conservative approach might involve waiting for a clearer breakout or breakdown from a technical perspective before entering a position.
3. USDCHF: The strong net short positioning in USDCHF, alongside the decrease in USD longs and the increase in shorts, suggests a potential bearish continuation for the pair. Similar to GBPCAD, consider exploring short positions with appropriate risk management.

Comparative COT Analysis: GBPUSD vs NZDUSD - Week Ending (April 23, 2024)

This analysis will delve into the Non-Commercial COT data for GBPUSD and NZDUSD, dissecting the sentiment surrounding the British Pound (GBP) and the New Zealand Dollar (NZD) against the US Dollar (USD).
Individual Currency Analysis:

1. GBP (British Pound):
   1. Non-Commercial:
      1. Net Position: Short bias in GBPUSD (-26.2%).
      2. Changes in Positioning: Significant decrease in long positions (-48.2%) and a notable increase in short positions (18.3%).
      3. Open Interest Trends: Increasing trend.
      4. Non-Commercial Long Contracts: Sharp decline of 23,341 contracts (-48.2% decrease).
      5. Non-Commercial Short Contracts: Increase of 11,511 contracts (18.3% increase).

   2. Commercial:
      1. Net Position: Long bias, but less pronounced compared to USD's commercial positioning.

2. NZD (New Zealand Dollar):
   1. Non-Commercial:
      1. Net Position: Short bias in NZDUSD (-13.5%).
      2. Changes in Positioning: Slight increase in both long (1.3%) and short positions (1.9%).
      3. Open Interest Trends: Decreasing trend.
      4. Non-Commercial Long Contracts: Slight increase of 235 contracts (1.3% increase).
      5. Non-Commercial Short Contracts: Slight increase of 556 contracts (1.9% increase).

   2. Commercial:
      1. Net Position: Long bias, similar to USD's commercial positioning.

3. USD (US Dollar): (Analyzed in previous responses, but relevant context will be included here)
   1. Non-Commercial:
      1. Net Position: Mixed. Slightly short in USDCAD (-0.4%) and more significantly short in USDCHF (-42.6%).
      2. Open Interest Trends: Increasing for USDCAD, also increasing for USDCHF.

Inter-Pair Analysis and Trading Recommendations:

1. GBPUSD: The substantial decrease in GBP longs and the increase in shorts point towards a potential bearish continuation for GBPUSD. This aligns with the increasing open interest, which suggests growing bearish sentiment. Consider exploring short positions with appropriate risk management strategies.
2. NZDUSD: The situation is more nuanced. While NZD exhibits a net short bias, the changes in positioning are relatively small, and the decreasing open interest suggests a potential decrease in overall trading activity. This could indicate a period of consolidation or indecision. A cautious approach might involve waiting for a clearer breakout or breakdown from a technical perspective before entering a position.

Comparative Insights:

1. Both GBPUSD and NZDUSD exhibit a net short bias from Non-Commercial traders. However, the magnitude of the positioning shift and the open interest trends suggest a stronger bearish sentiment for GBPUSD compared to NZDUSD.
2. The USD's mixed positioning across other pairs (USDCAD, USDCHF) adds a layer of complexity. While USD shows some weakness, its overall influence on GBPUSD and NZDUSD might depend on individual currency dynamics and broader market sentiment.

JPY Pairs Analysis: CADJPY, USDJPY, EURJPY, NZDJPY, GBPJPY, CHFJPY - Week Ending (April 23, 2024)

This analysis will focus on the Non-Commercial COT data for various JPY pairs, providing insights into the sentiment surrounding the Japanese Yen (JPY) and its interaction with the Canadian Dollar (CAD), US Dollar (USD), Euro (EUR), New Zealand Dollar (NZD), British Pound (GBP), and Swiss Franc (CHF).

Overall JPY Sentiment:

1. Non-Commercial: JPY exhibits a strong net short bias across all analyzed pairs, indicating a prevailing bearish sentiment among speculators.
2. Open Interest Trends: Open interest is generally increasing for JPY pairs, suggesting growing interest and potential volatility.

Individual Pair Analysis and Recommendations:

1. CADJPY:
   1. Bias: Bearish. CAD's short positioning (-32.8%) combined with the strong JPY short bias (-53.5%) reinforces the potential for further downside.
   2. Recommendation: Consider exploring short positions with appropriate risk management, such as stop-loss orders.

2. USDJPY:
   1. Bias: Bearish. The slight net short bias in USD (-0.4%) coupled with the significant JPY short positioning suggests potential weakness for USDJPY.
   2. Recommendation: Similar to CADJPY, short positions could be considered with careful attention to risk management.

3. EURJPY:
   1. Bias: Bearish. The slight net short bias in EUR (-1.6%) and the strong JPY short positioning point towards potential further downside for EURJPY.
   2. Recommendation: Aligned with the previous pairs, explore short positions while implementing risk management strategies.

4. NZDJPY:
   1. Bias: Bearish. The short bias in NZD (-13.5%) and the strong JPY short positioning suggest potential bearish continuation for NZDJPY.
   2. Recommendation: Short positions could be considered, but be cautious of potential volatility due to NZD's decreasing open interest.

5. GBPJPY:
   1. Bias: Bearish. The significant short bias in GBP (-26.2%) and the strong JPY short positioning indicate a potential strong bearish trend for GBPJPY.
   2. Recommendation: Short positions seem favorable, but be aware of potential volatility due to increasing open interest in GBPJPY.

6. CHFJPY:
   1. Bias: Bearish. The substantial short bias in both CHF (-42.6%) and JPY points towards a potential strong bearish trend for CHFJPY.
   2. Recommendation: Similar to GBPJPY, short positions appear attractive but exercise caution due to increasing open interest.

JPY Pairs with Highest Net Short Bias:

Based on the provided COT data, the two JPY pairs with the highest net short bias (indicating the strongest bearish sentiment) are:

1. CHFJPY: With a combined net short bias of -96.1% (calculated by adding the individual net positions as a percentage of open interest: -42.6% for CHF and -53.5% for JPY).
2. GBPJPY: With a combined net short bias of -79.7% (calculated by adding the individual net positions as a percentage of open interest: -26.2% for GBP and -53.5% for JPY).

These pairs exhibit the most significant bearish sentiment among speculators, potentially offering opportunities for short positions. However, it's crucial to consider other factors, such as open interest trends and potential volatility, before making trading decisions.

NB: I have missed this nice move GBPJPY - M30

Comparative COT Analysis: GBPUSD vs NZDUSD - Week Ending (April 23, 2024)

Live Trade Signal: SELL GBPUSD - M30