Positions of large speculators according to the COT report as at 5/4/2022

Total net speculator positions in the USD index rose by 911 contracts last week. This change is the result of a decrease in long positions by 3,932 contracts and a decrease in short positions by 4,843 contracts.
The growth in total net positions occurred last week in the euro, the Australian dollar and the Canadian dollar. There were declines in the total net positions of large speculators in the British pound, the New Zealand dollar, the Japanese yen and the Swiss franc.
Interest rate decisions will be made by the central banks of New Zealand and Canada (Wednesday) and the ECB on Thursday this week. The published monetary policy of these banks will be the decisive driver for the NZD, the CAD and the EUR this 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.

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

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

The total net positions of large speculators reached 27 370 contracts last week and they were up by 5 996 contracts compared to the previous week. This change is due to an increase in long positions by 10,871 contracts and an increase in short positions by 4,875 contracts. These data indicates a bullish sentiment for the euro.
Open interest has risen by 1,174 contracts in the last week. This shows that the downward movement that occurred in the euro last week was supported by a volume and it was therefore a strong price action.
The euro keeps moving in a downtrend. Last week it again reached a strong support in the area around 1.0850.
Long-term resistance: 1.0950 – 1.0980.  The next resistance is in the zone 1.1160 – 1.1180.
Support: 1.080-1.0850
 

The British pound

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 41,758 contracts and thez were down by 1,688 contracts compared to the previous week. This change is due to the growth in long positions by 5,249 contracts and the growth in short positions by 6,937 contracts. This suggests bearish sentiment as the total net positions of large speculators are negative while there has been their further decline.
Open interest rose by 13,901 contracts last week. This means that the downward movement in the pound that occurred last week was supported by a volume and it is therefore strong.
Long-term resistance: 1.3050 – 1.3070. The next resistance is in the zone 1.3270 – 1.3300.
Support is near 1.3000. The next support is near 1.2900
 

The Australian dollar

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 - 37,513 contracts, growing by 12,093 contracts compared to the previous week. This change is due to the growth in long positions by 911 contracts and a decrease in short positions by 11,182 contracts. This data suggests weak bearish sentiment for the Australian dollar as the total net positions of large speculators are negative, but there was an increase in the previous week.
There was an increase in open interest of 5,891 contracts last week. This means that the downward movement that occurred last week was supported by a volume and it was therefore a strong price action as new money flowed into the market.
The Australian dollar formed a strong bearish pin bar last week. This could indicate further weakening of the AUD/USD pair. However, the pair is in a support area, so to speculate in the short direction it is necessary to wait for the pair to break this support and for a valid retest of the break.
Long-term resistance: 0.7580-0.7660                                                                                                             
Long-term support: 0.7370-0.7440.  A next support is near 0.7160 – 0.7180.
 

The New Zealand dollar

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 to - 1 569 contracts, falling by 702 contracts compared to the previous week. This change is due to a decrease in long positions by 76 contracts and an increase in short positions by 626 contracts. This data suggests that bearish sentiment has set in in the New Zealand dollar over the past week, as the total net positions of large speculators are negative and they continue to fall
Open interest rose by 907 contracts last week.  It means that the downward movement in NZDUSD that occurred last week was supported by a volume and therefore this price action was strong.
Long-term resistance: 0.6860 – 0.6880. The next resistance is near 0.6980 – 0.7030
Long-term support: 0.6730 – 0.6740.
 

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.

• 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.