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Weekly COT report Analysis + Trade Ideas

  • #9,781
  • Edited 9:53am Dec 4, 2020 9:41am | Edited 9:53am
Quoting shahab8b
{quote} I think USD might be waking up. Also looking at gold, it can turn south again. So it's quit possible. Let's see how it plays out. {image}
Yes indeed. USDCAD hit the 1.28 level so if that turns out to be a solid low, everything appears to be lining up for USD to bounce.

Surely now EURUSD will tap 1.22? It's very close.

ECAD chart looks decent for a long here. 61.8 retracement of D1 move / 1.55 - 1.5550 and a retest of the long downtrend line.

This one is for a revisit next week.
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  • #9,782
  • Dec 4, 2020 9:45am Dec 4, 2020 9:45am
Quoting C-12
{quote} Yes indeed. USDCAD hit the 1.28 level so if that turns out to be a solid low, everything appears to be lining up for USD to bounce. Surely now EURUSD will tap 1.22? It's very close. ECAD chart looks decent for a long here. 61.8 retracement of D1 move / 1.5550 and a retest of the long downtrend line.
Except this.

I'd like to see a solid bearish close on EU. Let's see if that happens.
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  • #9,783
  • Dec 4, 2020 10:08am Dec 4, 2020 10:08am
They keep buying the dips on EU. The S @ 1.2140 is resilient.
  • #9,784
  • Dec 4, 2020 10:13am Dec 4, 2020 10:13am
Quoting shahab8b
They keep buying the dips on EU. The S @ 1.2140 is resilient.
I think we're all sick of this grinding move up like NU last few weeks and want to get the other side for a retracement play.

Looing at the D1 and the current forming bar, this doesn't look overly promising for bears just yet for a longer swing if we compare the PA from the lows off 1.16.

I've also looked at the top in 2017 and that took quite some weeks for it play out.
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  • #9,785
  • Dec 4, 2020 10:13am Dec 4, 2020 10:13am
Quoting FraterRedox
Took EG long now. {image}
Nice trade FraterRedox!

I feel EU might fall more than GU though. Just as a side note.
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  • #9,786
  • Edited 11:01am Dec 4, 2020 10:33am | Edited 11:01am
Quoting C-12
{quote} I am in the process of writing a 100% mechanical rule based strategy (including setups for confluence retracements and fresh RN reversals). I've added 50 pips as a mandatory TP1 for all counter RN setups. A mechanical rule based plan can never replace the 10-15 years+ screen time, but it can go quite a way to help new traders really start making money with flawless execution off solid levels. It will be good for my discipline as well. It's not going to be possible to cover every market condition, but retracements and reversals should offer...
Here's a live example of a 100% mechanical reversal counter trend setup. (CHFJPY lower)

1) Fresh untested round number
2) False breakout of a prior recent high.

Enter on RN - Initial SL 15 pips - TP 50 pips / BE set at 25 pips.

These appear multiple times all throughout the week (AU 0.74/ EU 1.20/ GU 1.35 / EG 0.90 etc). Of course being a late afternoon on a Friday this is not ideal for a setup and will not be allowed in the rules and will not hold over weekend. This is just the most recent example I can find that meets the setup criteria.

There was a great one on GBPAUD earlier I missed it off 1.82 went almost 100 pips. EURAUD - got the buy for 100 pips, missed the sell for 50+.

The strike rate I have found such setups to be quite high considering it's against the trend, possibly as high as 65-70%. You can plan these out either at the end of day or start of a session and use pending orders.
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  • #9,787
  • Dec 4, 2020 11:05am Dec 4, 2020 11:05am
Quoting C-12
{quote} Here's a live example of a 100% mechanical reversal counter trend setup. (CHFJPY lower) 1) Fresh untested round number 2) False breakout of a prior recent high. Enter on RN - Initial SL 15 pips - TP 50 pips / BE set at 25 pips. These appear multiple times all throughout the week (AU 0.74/ EU 1.20/ GU 1.35 / EG 0.90 etc). Of course being a late afternoon on a Friday this is not ideal for a setup and will not be allowed in the rules and will not hold over weekend. This is just the most recent example I can find that meets the setup criteria....
Good stuff C-12!
Those are good instructions, particularly for novice traders. For more sophisticated traders, I suggest doing a partial tp (maybe 2/3 of the position) at 50 pips, and leaving the rest with sl at b/e. Unless you want to switch side based on a retracement setup.

The reason being, you never know if that trade becomes a very good swing trade. So you want to give it a chance by being patient. For example, look at the EURNZD setup @ 1.7. That was a counter trend play. I still have the trade with +200 pips in profit. And this was your own setup.
  • #9,788
  • Dec 4, 2020 11:13am Dec 4, 2020 11:13am
Quoting shahab8b
{quote} Good stuff C-12! There are good instructions, particularly for novice traders. For more sophisticated traders, I suggest doing a partial tp (maybe 2/3 of the position) at 50 pips, and leaving the rest with sl at b/e. Unless you want to switch side based on a retracement setup. The reason being, you never know if that trade becomes a very good swing trade. So you want to give it a chance by being patient. For example, look at the EURNZD setup @ 1.7. That was a counter trend play. I still have the trades with +200 pips in profit. And this...
Just think of all of these counter RN's this week that have served up min 50 pips on majors alone.

On crosses it's often 100 pips to next RN that have so many setups it's impossible to count them. These below had almost zero DD on entry. These are not even with trend.

1) GU 1.35 - 80 pips
2) EU 1.20 - 75 pips
3) NU 0.71 - 65 pips and running
4) AU 0.74 - 55 pips
5) EG 0.90 - 50 pips

Then setups like GU 1.33 long that ran 200 pips etc... The potential here is insane with the correct execution and requires minimal experience.

And let's have less of EURNZD 1.70 talk in here.
  • #9,789
  • Dec 4, 2020 11:20am Dec 4, 2020 11:20am
Quoting C-12
{quote} Just think of all of these counter RN's this week that have served up min 50 pips on majors alone. On crosses it's often 100 pips to next RN that have so many setups it's impossible to count them. These below had almost zero DD on entry. These are not even with trend. 1) GU 1.35 - 80 pips 2) EU 1.20 - 75 pips 3) NU 0.71 - 65 pips and running 4) AU 0.74 - 55 pips 5) EG 0.90 - 50 pips Then setups like GU 1.33 long that ran 200 pips etc... The potential here is insane with the correct execution and requires minimal experience. And let's have...
Good stuff!

GU long @ 1.33 was not a counter trend play. It was a solid retracement setup in the direction of the trend.
  • #9,790
  • Edited 11:46am Dec 4, 2020 11:22am | Edited 11:46am
Quoting shahab8b
{quote} Good stuff! GU long @ 1.33 was not a counter trend play. It was a solid retracement setup in the direction of the trend.
Yep I should have pointed that out. I've not even got started on the trend retracement ones all the way up. Just think of how many over the last month there have been!

Remember that CHFJPY (1.14) and EURJPY (1.23) longs couple weeks ago? Of course I exited those early. (300+ pips off 20 pip SL)

Hopefully people will really start to see what's being shown here and actually something that everyone can do. Across all the 28 pairs, a handful of them are almost always approaching their RN's and many of them have viable setups attached to that RN.

I get the feeling that many on side-lines are seeing this as something very mystical but it's all so simple and logical.
  • #9,791
  • Dec 4, 2020 11:43am Dec 4, 2020 11:43am
All the day and time warnings need to be taken into account, but here's a nice scalp set up:

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1) Supply/Demand Delta Zone

2) Weekly FIB pivot.

3)38.2% - 50% FIB Retracement level.

4) Just above RN 104.00
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #9,792
  • Dec 4, 2020 12:59pm Dec 4, 2020 12:59pm
UC Anyone?
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Stay low, Go fast - No luck, All skill
  • #9,793
  • Dec 4, 2020 1:04pm Dec 4, 2020 1:04pm
Quoting tehtawar
UC Anyone? {image}
I was just looking at UCAD and noticed why 1.28 didn't reject off the pip. The main problem here was we had no false breakout low in front of it, or demand zone (now just hit) Basically there was no reason for stop orders to accumulate on 1.28 given the southerly express train of a move down.

It's one to revisit next week for a longer play. Scalping fine.
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  • #9,794
  • Dec 4, 2020 1:57pm Dec 4, 2020 1:57pm
Quoting shahab8b
{quote} Good stuff C-12! Those are good instructions, particularly for novice traders. For more sophisticated traders, I suggest doing a partial tp (maybe 2/3 of the position) at 50 pips, and leaving the rest with sl at b/e. Unless you want to switch side based on a retracement setup. The reason being, you never know if that trade becomes a very good swing trade. So you want to give it a chance by being patient. For example, look at the EURNZD setup @ 1.7. That was a counter trend play. I still have the trade with +200 pips in profit. And this was...
Quote
The reason being, you never know if that trade becomes a very good swing trade. So you want to give it a chance by being patient
Good stuff Shahab Your trades are pinpoint, I love the way you think. Especially when it comes to swing trades.
Cheers
Leon
Trade to trade another day
  • #9,795
  • Dec 5, 2020 7:31am Dec 5, 2020 7:31am
Quoting Wavegarrick
{quote} {quote} Good stuff Shahab Your trades are pinpoint, I love the way you think. Especially when it comes to swing trades. Cheers Leon
Thanks Leon. You're always full of positive energy. Hope you're having a good weekend.
  • #9,796
  • Dec 5, 2020 7:39am Dec 5, 2020 7:39am
EURUSD, we did get a relatively bearish D1 close. We might get a correction to the downside, but the long term trend remains bullish above 1.19. On the way down, there are S @ 1.21, 1.2050, and 1.20. Any of those levels might provide a bounce or a resumption of the uptrend. If it goes higher 1.22 might provide a short setup. I'm currently short EU.
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  • #9,797
  • Dec 5, 2020 7:56am Dec 5, 2020 7:56am
GBPUSD, D1 close is bearish. I am expecting more downside pressure to 1.34 and 1.33 in extension. The trend remains bullish above 1.33. The structure is starting to look like a wedge formation. Possible long setups @ 1.34 and 1.33. Short setups @ 1.355 and 1.36. I went short on Friday afternoon and left it open over the weekend. There is an asymmetric risk to the downside in the short term.

In the long term I think the uptrend will continue to +1.40 next year. I have a long term target of 1.48-1.50 based on the saucer pattern.
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  • #9,798
  • Dec 5, 2020 8:25am Dec 5, 2020 8:25am
Quoting C-12
{quote} I was just looking at UCAD and noticed why 1.28 didn't reject off the pip. The main problem here was we had no false breakout low in front of it, or demand zone (now just hit) Basically there was no reason for stop orders to accumulate on 1.28 given the southerly express train of a move down. It's one to revisit next week for a longer play. Scalping fine. {image}
Good explanation. In addition to that I think there were a cluster of SL below 1.29-1.2950. According to the COT data, large institutions are short CAD (long UCAD). If you look at the weekly chart, we broke below an important S level. So some might have closed their long USDCAD positions causing the sell off.

Also, we need to keep in mind that 1/3 of these trades will be losers. When a level is blown, there is no need to overthink it. Simply close the position with 10-20 pips loss and move on to next trade.
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  • #9,799
  • Edited 9:42am Dec 5, 2020 8:55am | Edited 9:42am
Quoting shahab8b
{quote} Good explanation. In addition to that I think there were a cluster of SL below 1.29-1.2950. According to the COT data, large institutions are short CAD (long UCAD). If you look at the weekly chart, we broke below an important S level. So some might have closed their long USDCAD positions causing the sell off. Also, we need to keep in mind that 1/3 of these trades will be losers. When a level is blown, there is no need to overthink it. Simply close the position with 10-20 pips loss and move on to next trade. {image}
I like your ruthless approach and not being concerned about small 1R loss in the grand scheme of things. We know not every single RN is going to produce a setup and there are structural areas on a chart to improve our strike rate.

Your EURCAD setup the other day off 1.57 was an excellent RN reversal with a clear swing high and false breakout (FB). A+ grade setup.

A straight 8-10 RR setup that only required a 20 pip SL Perhaps the stand out trade of the week. Although GBPUSD long off 1.33 was super quality as well.
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  • #9,800
  • Edited 12:57pm Dec 5, 2020 9:14am | Edited 12:57pm
Someone gave me a heads up on "Quarters Theory" which proposes that all major currencies move in Whole, Half and Quarter numbers across all timeframes.

The book, which is over 10 years old mentions USDJPY specifically moving off Quarter levels which I have found to be very accurate.

I have only skimmed it so far, but looks interesting and related to what we do here. Also discusses fib levels, price patterns and EW.

https://www.forexfactory.com/attachm...5&d=1607181934 (very temporary link)
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