Positions of large speculators according to the COT report as at 31/5/2022

Positions of large speculators according to the COT report as at 31/5/2022

Positions of large speculators according to the COT report as at 31/5/2022

Total net speculator positions on the USD index fell by 501 contracts last week to 37,538 contracts. This change is the result of an increase in long positions by 1,184 contracts and an increase in short positions by 1,685 contracts.
Significant fact is the further bullish movement in speculators' positions for the euro currency futures contracts. This week, the euro speculators increased their bullish positions for the fourth consecutive week and the sixth time in the last ten weeks. Over the past four weeks, speculators' total net positions in the euro have increased by a total of +58,650 contracts, from -6,378 net positions on May 3 to a total of +52,272 net positions last week. Total net positions for the euro are the highest in twelve weeks.
The recent improvement in euro positions has come with a very significant change in sentiment, as just four weeks ago the total position had fallen into bearish territory. Sentiment in the euro was so bad that analysts were talking about the inevitable decline of the euro to parity against the dollar. Recently, however, expectations have been growing that the European Central Bank will become more hawkish on interest rates in the near future and end its negative interest rate policy, causing the euro to strengthen.
In addition to the euro, speculators' total net positions rose on the British pound, the New Zealand dollar, the Canadian dollar and the Japanese yen.
On the Australian dollar and the Swiss franc, total net positions fell last week.


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

May 31, 2022

37538

52272

-74105

-48682

-18724

-94439

-7007

-20458

May 24, 2022

38039

38930

-80372

-45446

-19321

-99444

-12687

-19673

May 17, 2022

36213

20339

-79241

-44642

-17767

-102309

-14496

-16592

May 10, 2022

34776

16529

-79598

-41714

-12996

-110454

-5407

-15763

May 03, 2022

33071

-6378

-73813

-28516

-6610

-100794

9029

-13907

Apr 26,

2022

33879

22201

-69621

-27651

66

-95535

20881

-12869

 

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 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

Open Interest

Specs Long

Specs Short

Specs Net positions

change Open Interest

change Long

change Short

change Net Positions

Sentiment

May 31, 2022

706317

236553

184281

52272

-2621

-519

-13861

13342

Bullish

May 24, 2022

708938

237072

198142

38930

2226

6302

-12289

18591

Bullish

May 17, 2022

706712

230770

210431

20339

1666

2540

-1270

3810

Bullish

May 10 2022

705046

228230

211701

16529

10120

19781

3126

22907

Bullish

May 03, 2022

694926

208449

214827

-6378

6477

-14544

14035

-28579

Bearish

Apr 26, 2022

688449

222993

200792

22201

12510

1990

11090

-9100

Weak bullish

       

Total change

30378

15550

-5421

20971

 
 

COT-31-5-22-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 reached 52,272 contracts last week, up by 13,342 contracts compared to the previous week. This change is due to a decrease in long positions by 519 contracts and a decrease in short positions by 13,861 contracts. This data suggests bullish sentiment as the total net positions are positive while there has been an increase.
Open interest fell by 2,621 contracts in the last week. This shows that the move that occurred in the euro last week was not supported by the volume and it was therefore a weak price action.
The price has reached the EMA 50 moving average on the daily chart, at which it is oscillating, showing that there is a resistance here.
Long-term resistance: 1.0800 – 1.0840
Support: 1.0620 – 1-0630. The next support is in the zone 1.0340 – 1.0420.

 


The British pound

 

date

Open Interest

Specs Long

Specs Short

Specs Net positions

change Open Interest

change Long

change Short

change Net Positions

Sentiment

May 31, 2022

252881

30788

104893

-74105

-983

4852

-1415

6267

Weak bearish

May 24, 2022

253864

25936

106308

-80372

53

-677

454

-1131

Bearish

May 17, 2022

253811

26613

105854

-79241

-10783

-2856

-3213

357

Weak bearish

May 10, 2022

264594

29469

109067

-79598

-3902

-4067

1718

-5785

Bearish

May 03, 2022

268496

33536

107349

-73813

-4296

-6900

-2708

-4192

Bearish

Apr 26, 2022

272792

40436

110057

-69621

23263

3625

14332

-10707

Bearish

       

Total change

3352

-6023

9168

-15191

 
 

COT-31-5-22-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 amounted to 74,105 contracts, up by 6,267 contracts compared to the previous week. This change is due to an increase in long positions by 4,852 contracts and a decrease in short positions by 1,415 contracts. This indicates weak bearish sentiment as the total net positions of large speculators are negative, but at the same time there has been an increase in total net positions.
The open interest fell by 983 contracts last week, indicating that the downward movement in the pound that occurred last week was not supported by the volume and it was therefore a weak price action. Long-term resistance: 1.2700 – 1.2760.    Support: 1.2160 – 1.2200.
 

 


The Australian dollar

 

date

Open Interest

Specs Long

Specs Short

Specs Net positions

change Open Interest

change Long

change Short

change Net Positions

Sentiment

May 31, 2022

153661

32897

81579

-48682

-4954

-3682

-446

-3236

Bearish

May 24, 2022

158615

36579

82025

-45446

-5194

-4894

-4090

-804

Bearish

May 17, 2022

163809

41473

86115

-44642

10600

4604

7532

-2928

Bearish

May 10, 2022

153209

36869

78583

-41714

952

-10126

3072

13198

Bearish

May 03, 2022

152257

46995

75511

-28516

5167

-110

755

-865

Bearish

Apr 26, 2022

147090

47105

74756

-27651

-219

7904

6718

1186

Weak bearish

       

Total change

6352

-6304

13541

-19845

 
 

COT-31-5-22-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 amounted to 48,682 contracts, down by 3,236 contracts compared to the previous week. This change is due to a decrease in long positions by 3,682 contracts and a decrease in short positions by 446 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 has been a further decline in the past week.
There was a decline in open interest of 4,954 contracts last week. This means that the upward movement that occurred last week was not supported by the volume and it was therefore weak price action.
The price has currently reached the horizontal resistance at 0.7260 where a reaction occurred. If this resistance is  broken, a further bullish movement could continue.
Long-term resistance: 0.7250-0.7260                                                                                                             
Long-term support: 0.6830-0.6850  
 


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

May 31, 2022

55134

9179

27903

-18724

-4145

-1570

-2167

597

Weak bullish

May 24, 2022

59279

10749

30070

-19321

-1525

-4249

-2695

-1554

Bearish

May 17, 2022

60804

14998

32765

-17767

4569

-205

4566

-4771

Bearish

May 10, 2022

56235

15203

28199

-12996

5391

-2224

4162

-6386

Bearish

May 03, 2022

50844

17427

24037

-6610

4334

-4658

2018

-6676

Bearish

Apr 26, 2022

46510

22085

22019

66

5412

3004

3303

-299

Weak bullish

       

Total change

14036

-9902

9187

-19089

 
 

COT-31-5-22-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 reached -18,724 contracts last week, having grown by 597 contracts compared to the previous week. This change is due to a decrease in long positions by 1,570 contracts and a decrease in short positions by 2,167 contracts. This data suggests that there has been a weakening of bearish sentiment on the New Zealand Dollar over the past week as the total net positions of large speculators are negative, but there has also been an increase in total net positions.
The open interest fell by 4,145 contracts last week.  The move in NZD/USD that occurred last week was not supported by the volume and therefore the move was weak.
The NZD/USD has reached the resistance band at 0.6570 and also the EMA 50 moving average on the daily chart, which is a strong confluence and there has already been some bearish reaction there. If this resistance is broken, further strengthening could occur
Long-term resistance: 0.6540 – 0.6560
Long-term support: 0.6220 – 0.6280
 

 


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.