Weekly COT report Analysis + Trade Ideas

Hi Victory,

Nice charts, but in AJ chart I do not think so. AJ hit resitance Fibo level 61.8 at price 82.40. The more important is the candlestick formation does not the same in AB = CD. In AB zone, there are lots of large green candle. However, in CD zone there are doji and small candles, so I think bullish force is not strong.

Just my idea. I do not trade AJ now, but I am shorting EJ.

Yup. I agree. Full retracement completed in A/J.

A/J is also short.

it was really great pattern and i still look for next level.
but you are right, i think same as you

Time for a sentiment reading? Why not. That EUR is holding up well considering the strikes in Greece That's really gonna get the country working. Good luck with the Bernanke circus!

SSI: AUDUSD Ratio Flips as Retail Bears Fade Previous Week’s Advance
Wednesday, 24 Feb 2010 10:36 GMT
Written by Michael Wright, Daily FX Research

FXCM Speculative Sentiment Index (SSI) Statistics:

Attached Image (click to enlarge)

SSI Details:

EURUSD - The ratio of long to short positions in the EURUSD stands at 1.36 as nearly 58% of traders are long. Yesterday, the ratio was at 1.55 as 61% of open positions were long. In detail, long positions are 3.3% lower than yesterday and 8.8% stronger since last week. Short positions are 10.1% higher than yesterday and 19.2% stronger since last week. Open interest is 2.0% stronger than yesterday and 16.2% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses.

GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.47 as nearly 59% of traders are long. Yesterday, the ratio was at 1.85 as 65% of open positions were long. In detail, long positions are 11.2% lower than yesterday and 0.8% stronger since last week. Short positions are 11.8% higher than yesterday and 15.9% stronger since last week. Open interest is 3.1% weaker than yesterday and 4.8% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

GBPJPY - The ratio of long to short positions in the GBPJPY stands at 2.45 as nearly 71% of traders are long. Yesterday, the ratio was at 3.37 as 77% of open positions were long. In detail, long positions are 5.1% lower than yesterday and 68.8% stronger since last week. Short positions are 30.8% higher than yesterday and 37.1% weaker since last week. Open interest is 3.1% stronger than yesterday and 21.2% above its monthly average. The SSI is a contrarian indicator and signals more GBPJPY losses.

USDJPY - The ratio of long to short positions in the USDJPY stands at 2.42 as nearly 71% of traders are long. Yesterday, the ratio was at 2.36 as 70% of open positions were long. In detail, long positions are 2.1% higher than yesterday and 66.9% stronger since last week. Short positions are 0.2% lower than yesterday and 29.9% weaker since last week. Open interest is 1.4% stronger than yesterday and 6.9% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCAD - The ratio of long to short positions in the USDCAD stands at 1.28 as nearly 56% of traders are long. Yesterday, the ratio was at 1.08 as 52% of open positions were long. In detail, long positions are 4.2% higher than yesterday and 18.8% weaker since last week. Short positions are 12.4% lower than yesterday and 17.1% stronger since last week. Open interest is 3.8% weaker than yesterday and 0.6% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 1.08 as nearly 52% of traders are long. Yesterday, the ratio was at -1.22 as 55% of open positions were short. In detail, long positions are 2.8% higher than yesterday and 15.8% stronger since last week. Short positions are 22.1% lower than yesterday and 19.5% weaker since last week. Open interest is 10.9% weaker than yesterday and 4.7% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

AUDUSD - The ratio of long to short positions in the AUDUSD stands at -1.11 as nearly 53% of traders are short. Yesterday, the ratio was at 1.07 as 52% of open positions were long. In detail, long positions are 2.4% lower than yesterday and 22.4% stronger since last week. Short positions are 16.6% higher than yesterday and 9.6% weaker since last week. Open interest is 6.8% stronger than yesterday and 6.9% above its monthly average. The SSI is a contrarian indicator and signals more AUDUSD gains.

NZDUSD - The ratio of long to short positions in the NZDUSD stands at 1.27 as nearly 56% of traders are long. Yesterday, the ratio was at 1.28 as 56% of open positions were long. In detail, long positions are 10.4% higher than yesterday and 18.0% stronger since last week. Short positions are 11.3% higher than yesterday and 12.6% weaker since last week. Open interest is 10.8% stronger than yesterday and 0.1% below its monthly average. The SSI is a contrarian indicator and signals more NZDUSD losses.

hi patience,
thanx for the SSI, I've been waiting for it.
after the nice short ride in A/U and long ride in U/C I decided to give myself a break for a day or two-
what do you think of USDX, are we heading up or we may see a correction down?

A/U
sell limit order
sell at .8970
SL=.9020
TP.8890

trading central weekly report

Hi Shahab

We had a bullish engulfing yesterday so I wasn't going to bet on USD weakness but (as I said on the AUD thread) the fly in the ointment was Bernanke's speech. I would have thought that the USD would try to end the month strong giving us three nice green candles or soldiers on monthly. I'm not so sure now unless we get another dose of risk aversion before the week is out. Four hourly isn't clear either. Even though I'm not a US$ fan I suppose I still favour gains but it's not looking very positive at the moment.

I must add that I'm not looking at things too clearly though because FXCM just wiped out my account with a spike in AUD to 2.19. I'm not the only one that this has happened to. I sat there in disbelief watching all my positions being closed out. Now I know what a margin call is like. Freaky.

what do you mean a spike to 2.19??? how could it be possible? did you call them? what are they saying about that? I cant believe hearing that its too scary
I hope they refund your money, they really should do that

No, I haven't called them. Just filled in some "audit" form on-line. I think it was a glitch in their system and I fully expect all my money and positions to be reinstated otherwise heads will be rolling. But the account is inoperable with a £40,000 odd loss for the day and nothing to play with ..... in fact I owe them another £18,000 by the looks of things ....

Do you think it's a sign of what's to come. $2.19 on A/U? Lol - in my dreams ....

That was another thing I saw. Bloomberg said that since 2000 Gold has lost 70% of the time in the month of March.

Hi Patience,
Great thread that Shahab has going here. Have learned a lot from you guys.
Can you tell me where I can find this article on Bloomberg about Gold market in March?
I did find this one: http://www.bloomberg.com/apps/news?p...d=a4RDpwl49NDc
Alex Rudolph, is usually very good in his analysis.
Thanks much to all here.
Cliff

I hope that you get your money back soon.
and bout Gold, I'm always skeptical on what they write in bloomberg-i mean the forecasts not the news- we will see this time -if the history really repeats itself- we should see gold down

my view on Gold is bullish -another new high then bearish to the extreme-

Hi Cliff

I should have said that it was on Bloomberg television that I saw this. I shove it on in the background when I'm doing the housework. Must be getting old if I'm listening to Bloomberg and not MTV - lol. It was just a quick presentation - nothing major - just some bloke noting that since 2000 gold had gone down 70% of the time in March. So there's always a 30% chance that it will go up

Yeah, thanks, so do I. I had more than enough margin in normal circumstances but it did give me a bit of a fright.

So you see gold to over $1,200 again? What's your timeline on this?

I've looked at the charts again tonight and I'm none the wiser for the remainder of the week. May just chop around unless we get some unexpected announcement. Just looking at A/U ranges - average monthly range for 2009 was 632 pips. We did 496 pips in January and we've done 493 pips for this month so far so that's not giving me anything either. A/J bounced off 200 day MA as well. Ho, hum - back to the charts to see if I can glean anything else.

[EDIT] Couldn't really face opening my FXCM platform to have a look at the Sentiment Index but since the charts aren't giving me anything thought I better take a look. The good news is that everything has been reinstated and all is back to normal. And I'll post the Sentiment reading because it's quite different from this morning and rather interesting. Open interest dropped across the board because they probably margin called half of their client base!

SSI: Retail Open Interest Drops Across the Board
Wednesday, 24 Feb 2010 18:51 GMT
Written by John Kicklighter

FXCM Speculative Sentiment Index (SSI) Statistics:




SSI Details:

EURUSD - The ratio of long to short positions in the EURUSD stands at 1.17 as nearly 54% of traders are long. Yesterday, the ratio was at 1.55 as 61% of open positions were long. In detail, long positions are 20.5% lower than yesterday and 10.6% weaker since last week. Short positions are 5.2% higher than yesterday and 13.8% stronger since last week. Open interest is 10.4% weaker than yesterday and 2.7% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses.

GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.89 as nearly 65% of traders are long. Yesterday, the ratio was at 1.85 as 65% of open positions were long. In detail, long positions are 12.3% lower than yesterday and 0.5% weaker since last week. Short positions are 14.2% lower than yesterday and 11.1% weaker since last week. Open interest is 13.0% weaker than yesterday and 5.4% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

GBPJPY - The ratio of long to short positions in the GBPJPY stands at 2.68 as nearly 73% of traders are long. Yesterday, the ratio was at 3.37 as 77% of open positions were long. In detail, long positions are 14.2% lower than yesterday and 52.6% stronger since last week. Short positions are 8.0% higher than yesterday and 48.1% weaker since last week. Open interest is 9.1% weaker than yesterday and 7.5% above its monthly average. The SSI is a contrarian indicator and signals more GBPJPY losses.

USDJPY - The ratio of long to short positions in the USDJPY stands at 2.54 as nearly 72% of traders are long. Yesterday, the ratio was at 2.36 as 70% of open positions were long. In detail, long positions are 9.2% lower than yesterday and 48.5% stronger since last week. Short positions are 15.4% lower than yesterday and 40.6% weaker since last week. Open interest is 11.0% weaker than yesterday and 5.7% below its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCAD - The ratio of long to short positions in the USDCAD stands at 2.35 as nearly 70% of traders are long. Yesterday, the ratio was at 1.08 as 52% of open positions were long. In detail, long positions are 20.2% lower than yesterday and 37.8% weaker since last week. Short positions are 63.4% lower than yesterday and 51.0% weaker since last week. Open interest is 41.0% weaker than yesterday and 37.2% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 2.15 as nearly 68% of traders are long. Yesterday, the ratio was at -1.22 as 55% of open positions were short. In detail, long positions are 26.4% lower than yesterday and 17.0% weaker since last week. Short positions are 72.0% lower than yesterday and 71.0% weaker since last week. Open interest is 51.5% weaker than yesterday and 47.0% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

AUDUSD - The ratio of long to short positions in the AUDUSD stands at 2.06 as nearly 67% of traders are long. Yesterday, the ratio was at 1.07 as 52% of open positions were long. In detail, long positions are 43.6% lower than yesterday and 29.3% weaker since last week. Short positions are 70.6% lower than yesterday and 77.2% weaker since last week. Open interest is 56.6% weaker than yesterday and 55.3% below its monthly average. The SSI is a contrarian indicator and signals more AUDUSD losses.

NZDUSD - The ratio of long to short positions in the NZDUSD stands at 1.86 as nearly 65% of traders are long. Yesterday, the ratio was at 1.28 as 56% of open positions were long. In detail, long positions are 35.7% lower than yesterday and 31.3% weaker since last week. Short positions are 55.7% lower than yesterday and 65.2% weaker since last week. Open interest is 44.5% weaker than yesterday and 48.8% below its monthly average. The SSI is a contrarian indicator and signals more NZDUSD losses.


How to Interpret the SSI? The FXCM SSI is based on proprietary customer flow information and is designed to recognize price trend breaks and reversals in the four most popularly traded currency pairs. The absolute number of the ratio itself represents the amount by which longs exceed shorts or vice versa. For example if the EURUSD ratio is 2.55, long customer orders exceed short orders by a ratio of 2.55 to 1. Conceptually similar to contrarian analyses using the CFTC IMM open position data or COT Report, the SSI provides an alternative approach that is both more timely and accurate in forecasting currency price movement. The SSI is a contrarian indicator that tells you how the market is weighted and where the trend may head. More long positions don't necessary suggest more confidence in the direction of the current trend. In general, when traders start having adverse movements against their position, many tend to increase the size of their position with the purpose to average down their entry price in one last attempt to recover from previous losses. However, the higher the number of short orders in a bull market the more dangerous is to take additional shorts because many of those traders who just entered the markets are also leaving their protective stop losses just above the current price action.

Okay, so we have risk aversion and it's looking good for the USD and Yen to end the month strong. When I went to bed AUD was trying to go up. Yen has done a fairly low monthly range so I'm going to look into my crystal ball and say the Yen is going to do one of it's famous spike downs and crush all those retail traders that are short on it.

Daily Market Strategy attached. Good trades today

All the fundamental forecasts for Australia are extremely good with nothing short of boom times anticipated from here on. The R.B.A is expected to hike next week as part of a continuing tightening cycle that reflects this extremely positive fundamental outlook. This explains the ssi flip to long positioning and yet AUD/USD is struggling to hold above 8850 support. Risk aversion is high and the big dogs arent buying into all the recovery talk anymore. There is much more pain to come and we all know it. I think it is going to tank in a spectacular panic sell off that sees USD soar leaving USD bears licking there wounds. I think the likely catalyst for this will be a bubble burst in China but it could be contagion in the Eurozone or even sovereign debt issues from the U.S or Britain. Not sure when but if the RBA does raise on tuesday and we dont see a sustained rally from this, it will be game over next week

It was interesting to note yesterday that even though Bernanke reiterated (once again) that interest rates would remain low for an extended period, the rally against the USD was brief. Lots of nervousness. I was going to edit my previous post to say that I don't necessarily expect the Yen to do a spike down today but tomorrow could be very volatile just to end the month off. PPT are on standby

Here's some professional analysis Shahab. I know you like wave counts.



Some commentary for attached chart here http://www.aspentrading.com/ra.php

hi patience,
I'm happy that the fxcm issue has resolved. now you are back into the game
what a nice and clean chart and very precise EW count- that's the first time I see you have posted your EW analysis ,

what I think is a correction underway- I see an ending diagonal at E/U & U/chf -E/U will corrct upto 1.40-41 Gold rising in the near future to a new high- and A/U heading toward .91-2 - these are things that I see on their charts

Lol - I wish I could draw charts like that. I used to get Societe Generale's analysis emailed to me a few years back (somebody in-house used to email it to me) and they used EW. It was wrong as many times as it was right so I decided that if these analysts who were educated and who were paid thousands of ££££'s couldn't get it right, then what chance did I have to learn EW. I know Robert Prechter was calling a USD bottom in about September last year. Three months can be a long time to wait for some traders.

I can't see anything clear on my charts at the moment except there was a nice pin bar on 4 hour A/U. I don't know about anyone else but I'm finding this chop hard going. And to top it off we have a Friday and end-of-month. Think I might clock off early.

[EDIT] You know what else is confusing me now. The JPY. I always thought that the reason for Yen strength was because they had a high savings rate, it's used as a proxy for the Yuan and because they can sell their JGB's in-house without having to go to the market (unlike the US). Now I've just heard that Japan's savings rate is now below that of the US! Get that! Their debt to GDP ratio is apparently something like 200%. And look at it, remaining so strong.

SSI: USDCHF Ratio Jumps as Retail Bears Take Profit
Friday, 26 Feb 2010 10:39 GMT
Written by Michael Wright, Daily FX Research

FXCM Speculative Sentiment Index (SSI) Statistics:

Attached Image (click to enlarge)

SSI Details:

EURUSD - The ratio of long to short positions in the EURUSD stands at -1.21 as nearly 55% of traders are short. Yesterday, the ratio was at -1.03 as 51% of open positions were short. In detail, long positions are 5.1% lower than yesterday and 4.5% stronger since last week. Short positions are 10.9% higher than yesterday and 39.0% stronger since last week. Open interest is 3.0% stronger than yesterday and 3.2% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.97 as nearly 66% of traders are long. Yesterday, the ratio was at 2.04 as 67% of open positions were long. In detail, long positions are 0.6% higher than yesterday and 4.1% stronger since last week. Short positions are 3.9% higher than yesterday and 14.2% stronger since last week. Open interest is 1.7% stronger than yesterday and 2.7% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

GBPJPY - The ratio of long to short positions in the GBPJPY stands at 2.58 as nearly 72% of traders are long. Yesterday, the ratio was at 2.48 as 71% of open positions were long. In detail, long positions are 12.7% higher than yesterday and 59.1% stronger since last week. Short positions are 8.6% higher than yesterday and 7.0% weaker since last week. Open interest is 11.5% stronger than yesterday and 22.4% above its monthly average. The SSI is a contrarian indicator and signals more GBPJPY losses.

USDJPY - The ratio of long to short positions in the USDJPY stands at 3.21 as nearly 76% of traders are long. Yesterday, the ratio was at 3.18 as 76% of open positions were long. In detail, long positions are 5.0% higher than yesterday and 78.9% stronger since last week. Short positions are 4.0% higher than yesterday and 30.4% weaker since last week. Open interest is 4.7% stronger than yesterday and 5.0% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCAD - The ratio of long to short positions in the USDCAD stands at 2.03 as nearly 67% of traders are long. Yesterday, the ratio was at 2.00 as 67% of open positions were long. In detail, long positions are 2.9% lower than yesterday and 33.1% weaker since last week. Short positions are 4.2% lower than yesterday and 0.8% stronger since last week. Open interest is 3.3% weaker than yesterday and 28.1% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 2.10 as nearly 68% of traders are long. Yesterday, the ratio was at 1.63 as 62% of open positions were long. In detail, long positions are 8.5% higher than yesterday and 11.4% weaker since last week. Short positions are 15.8% lower than yesterday and 33.9% weaker since last week. Open interest is 0.7% weaker than yesterday and 36.0% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

AUDUSD - The ratio of long to short positions in the AUDUSD stands at -1.07 as nearly 52% of traders are short. Yesterday, the ratio was at 1.04 as 51% of open positions were long. In detail, long positions are 2.0% higher than yesterday and 16.6% weaker since last week. Short positions are 12.8% higher than yesterday and 40.0% weaker since last week. Open interest is 7.3% stronger than yesterday and 32.2% below its monthly average. The SSI is a contrarian indicator and signals more AUDUSD gains.

NZDUSD - The ratio of long to short positions in the NZDUSD stands at 1.01 as nearly 50% of traders are long. Yesterday, the ratio was at 1.02 as 51% of open positions were long. In detail, long positions are 0.6% higher than yesterday and 27.3% weaker since last week. Short positions are 1.9% higher than yesterday and 19.3% weaker since last week. Open interest is 1.2% stronger than yesterday and 29.8% below its monthly average. The SSI is a contrarian indicator and signals more NZDUSD losses.

yea, that's the issue with EW, even EWI that are supposed to be the source are making wrong analysis sometimes-
but if you trade the patterns and take some notes of EW your chance will increase- this is a game of probability and risk management- that's it

I read SSI pointed at more A/U gain and more loss at U/cad- that was what I thought . fortunately I wasn't on the wrong side today