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Weekly COT report Analysis + Trade Ideas

  • #1,401
  • Apr 7, 2010 5:53pm Apr 7, 2010 5:53pm
A/U
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  • #1,402
  • Apr 7, 2010 5:58pm Apr 7, 2010 5:58pm
Quoting M.A.C.Doug
Oanda traders are now 60% long AUD/USD in agreement with RPM and yet FXCM SSI is till showing short positions dominate and suggest more AUD/USD gains. How can we reliably trade sentiment when we cant reliably gauge it?
I think Oanda traders are usually on the right side, as far as I understand, I never tried Oanda so I cant say anything informative.
overall I think the long boat is overcrowded , but as far as risk is on-today we saw some risk aversion though- this pair is a buy in dip

it's really interesting that Oanda traders are long U/Cad and A/U at the same time!!!!
  • #1,403
  • Apr 7, 2010 6:03pm Apr 7, 2010 6:03pm
I set buy limit order for U/Cad at 1.0024 SL=30 pips
  • #1,404
  • Apr 7, 2010 6:14pm Apr 7, 2010 6:14pm
Quoting M.A.C.Doug
Oanda traders are now 60% long AUD/USD in agreement with RPM and yet FXCM SSI is till showing short positions dominate and suggest more AUD/USD gains. How can we reliably trade sentiment when we cant reliably gauge it?
You don't trade it. You sit on the sidelines and wait. Forex is the art of trading probabilities. The golden rule - if in doubt, don't. There are plenty of "no doubt-low risk" opportunities every single day, no point taking excessive risk when what you are looking for in this market is to stack the probabilities in your own favour as much as possible.

The potential for the carry trade to unwind in a hurry after this set of employment numbers comes out is not insignificant. Helicopter money has dried up. The carry trade will be the first to choke.

As for the numbers themselves, it is impossible to predict. On the one hand, we have negative trade balance, negative retail sales, negative housing approvals, and a major dip (m/m) in job ads. How does that climate promote or support a predicted jobs increase number? It doesn't. The EUR/AUD cross is putting in a support base just below 1.4400, that is enough warning to suggest that market may be ready to dump the AUD.

On the other hand, the capacity for statistical manipulation of employment numbers to make them read more positive than they really are is also on the cards.

It is always better to wait and let market itself confirm your thinking. Better to arrive a little late than to rush in too early.
  • #1,405
  • Apr 7, 2010 6:48pm Apr 7, 2010 6:48pm
Quoting shahab8b
Hi buddy,
do you know what might be the unemployment no?

I was thinking all along that employment numbers should be negative but service sector is doing good here in Sydney (As far as I can see). a lot of people have got jobs after February as typically post Feb, the employment season usually kicks in.

I am geting unsolicited calls for employment, people have the bargain power for salary and all those facts points towards a stronger number.

i took my loss on AUD shorts and now long from .9270 with 1st TP at .9350 and then trail the stop.

IF I AM WRONG YET AGAIN ON AUD, I WILL NOT TRADE THIS PAIR.

February data was soft but RBA knows something we dont...
  • #1,406
  • Apr 7, 2010 7:12pm Apr 7, 2010 7:12pm
Quoting puks
I was thinking all along that employment numbers should be negative but service sector is doing good here in Sydney (As far as I can see)....
thanx for the information. I'm so sorry to hear that you took the loss.I hope that you recover it soon.

the long on A/u that you took from .9270 , is it because of unemployment news or other reason?
  • #1,407
  • Apr 7, 2010 7:12pm Apr 7, 2010 7:12pm
Quoting Jade Gate
You don't trade it. You sit on the sidelines and wait. Forex is the art of trading probabilities. The golden rule - if in doubt, don't. There are plenty of "no doubt-low risk" opportunities every single day, no point taking excessive risk when what you are looking for in this market is to stack the probabilities in your own favour as much as possible.



It is always better to wait and let market itself confirm your thinking. Better to arrive a little late than to rush in too early.
Thanks Jade
I dont actually trade sentiment in isolation but I do check it when considering a position so consistent data is necessary or its not worth bothering. Today I opened a short on AUD/USD at .9270 based on yesterdays spinning top at long term trendline resistance on the daily chart. The set up is valid on its own but its nice to be on the right side of sentiment as a little extra confirmation. However the report from Oanda and RPM conflicts with FXCM so actual positioning is not able to be accurately determined. With the reliability of the reports in question, I am wondering how much self interest may come into market maker supplied figures and trade recommendations, thats all
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  • #1,408
  • Apr 7, 2010 7:16pm Apr 7, 2010 7:16pm
Quoting Jade Gate
You don't trade it....
Hi Jade Gate, I should have listened to you. I missed the chance to cash in long U/J and E/J at best price, overall no complain because I closed them all well in profit but I could have done better if I had listened to your risk aversion comments.
  • #1,409
  • Apr 7, 2010 7:19pm Apr 7, 2010 7:19pm
Quoting mmccormac
I'm looking for a very long term hold on this pair once it goes back to test that Weekly TL and shows proof of bounce on it. This could be the trade of the year... Might be able to hold this Carry trade for a year or more.
I think the Yen takes the Dollars place and becomes the new whipping boy this year... I plan to add more when/if we near 92.70; that's where the big breakout occurred so it should be pretty solid support... It is hard to hold long-term though... I'll be in and out at 95, 97 and eventually 100 (just gotta make sure I hold a few units that long as I scale in and out).
  • #1,410
  • Apr 7, 2010 7:24pm Apr 7, 2010 7:24pm
Quoting shahab8b
thanx for the information. I'm so sorry to hear that you took the loss.I hope that you recover it soon.

the long on A/u that you took from .9270 , is it because of unemployment news or other reason?
Purely based on unemployment numbers. trend is too strong to fight.

Lets see what the numbers print and I'll post in detail a little later.
  • #1,411
  • Apr 7, 2010 7:40pm Apr 7, 2010 7:40pm
U/J

if my EW count is correct the price should not fall below 92.80

U/J long 93.30 SL= 93.10 or wider 92.80

note how precise price reversed at 1.61% projection- i had it in my first chart but somehow i got ride of that and put myself in serious trouble

in 15min, there is a case of double bottom for those want more reason to take long , the neckline has not broken yet
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  • #1,412
  • Apr 7, 2010 7:57pm Apr 7, 2010 7:57pm
A/U

my thoughts
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  • #1,413
  • Apr 7, 2010 8:14pm Apr 7, 2010 8:14pm
A/U

I set sell limit order at .9325 (weekly R2+ previous high) SL=.9345 TP=TBD
  • #1,414
  • Apr 7, 2010 8:23pm Apr 7, 2010 8:23pm
i took long U/Cad at 1.0045 SL= 1.0035 TP=TBD

the chart is the larger pic but 15min I saw bullish triangle that's the reason of my trade and SL

will hold to it if this tight SL doesn't hit
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  • #1,415
  • Apr 7, 2010 9:53pm Apr 7, 2010 9:53pm
[quote=Patience;3615861]I spy with my little eye a mixed bag of sorts. Mmmmm, don't know what to get my scalping paws on.

SSI: USDJPY Ratio Flips on 12% Decline in Shorts
Wednesday, 07 Apr 2010 09:33 GMT
Written by Michael Wright, DailyFX Research

FXCM Speculative Sentiment Index (SSI) Statistics:



Intraday Highlight:

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.12 as nearly 53% of traders are long. Yesterday, the ratio was at -1.01 as 50% of open positions were short. In detail, long positions are 0.2% lower than yesterday and 27.0% stronger since last week. Short positions are 12.0% lower than yesterday and 20.1% weaker since last week. Open interest is 6.1% weaker than yesterday and 2.8% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

SSI Details:

EURUSD - The ratio of long to short positions in the EURUSD stands at 1.08 as nearly 52% of traders are long. Yesterday, the ratio was at -1.09 as 52% of open positions were short. In detail, long positions are 3.8% higher than yesterday and 16.4% stronger since last week. Short positions are 11.6% lower than yesterday and 27.7% weaker since last week. Open interest is 4.2% weaker than yesterday and 0.1% below its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses.

Hi All,

I'm new at reading these COT and contrarian reports and I'm still trying to get my head around them. For this report, the last line states "The SSI is a contrarian indicator and signals more EURUSD losses", Is this the line in the report that is the summary and tells you what the basis is? In this case short EURUSD? I just wasn't 100% sure since the sentence states it's a contrarian indicator.

Sorry for the rookie question...





  • #1,416
  • Apr 7, 2010 10:03pm Apr 7, 2010 10:03pm
[quote=ozziedave;3618205]
Quoting Patience
I spy with my little eye a mixed bag of sorts. Mmmmm, don't know what to get my scalping paws on.

SSI: USDJPY Ratio Flips on 12% Decline in Shorts
Wednesday, 07 Apr 2010 09:33 GMT
Written by Michael Wright, DailyFX Research

FXCM Speculative Sentiment Index (SSI) Statistics:



Intraday Highlight:

USDJPY[font=Arial] - The ratio of long to short positions in the USDJPY stands at 1.12...
SSI is retail traders positioning , usually it shows a bunch of losers got stuck in the wrong side of the market.so basically when you are trading like them there is good chance that you are wrong. it is different in nature and interpretation comparing to COT as the latter is the market mover.

to use SSI look at the ratio of long/short ,when it shows most of them are long you should trade short and visa versa, but once in a while the retailers are in the right side of the market, so you need to use it as a tool with combination of your technical analysis.
  • #1,417
  • Apr 7, 2010 10:04pm Apr 7, 2010 10:04pm
Possible long trade on A/J right now.
When this baby hits 88 miles per hour, you're gonna see some serious s***.
  • #1,418
  • Edited 10:42pm Apr 7, 2010 10:05pm | Edited 10:42pm
Quoting ozziedave

Hi All,

I'm new at reading these COT and contrarian reports and I'm still trying to get my head around them. For this report, the last line states "The SSI is a contrarian indicator and signals more EURUSD losses", Is this the line in the report that is the summary and tells you what the basis is? In this case short EURUSD? I just wasn't 100% sure since the sentence states it's a contrarian indicator.

Sorry for the rookie question...
Brokers operate on the belief that retail traders are habitually wrong in their choices i.e. if the majority of retail traders are backing a certain long or short position, the chances are very high that the pair will go in the opposite direction. This is what makes the SSI a contrarian indicator, i.e whatever retail traders are backing is very likely NOT to happen.

Dealing desk brokers make a lot of money from traders habitually getting it wrong. Sufficiently so that it makes their business very profitable and the SSI very reliable.

The caveat - the quality of contrarian opinion contained within any given broker's SSI graphs can be polluted by the calibre of traders they attract, which is why some may show bull, while others may show bear.

While it's interesting reading, in trading terms, it's just noise.

btw, the COT report is NOT a contrarian indicator, it has more validity because it represents all sections of the market (institutional/commercial/retail), not just retail traders... but even then, need to remember that COT is a delayed report from the previous week... and in this market, 30 minutes, let alone a few days, can be a long time in terms of the changing tides of sentiment.
  • #1,419
  • Apr 7, 2010 10:39pm Apr 7, 2010 10:39pm
[quote=ozziedave;3618205]
Quoting Patience
For this report, the last line states "The SSI is a contrarian indicator and signals more EURUSD losses", Is this the line in the report that is the summary and tells you what the basis is? In this case short EURUSD? I just wasn't 100% sure since the sentence states it's a contrarian indicator.

Sorry for the rookie question...




you are correct, when it says it signals more losses that is the contrarian position and you should look to sell against the crowd
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  • #1,420
  • Apr 7, 2010 11:17pm Apr 7, 2010 11:17pm
Quoting shahab8b
i took long U/Cad at 1.0045 SL= 1.0035 TP=TBD

the chart is the larger pic but 15min I saw bullish triangle that's the reason of my trade and SL

will hold to it if this tight SL doesn't hit
nice chart, i think ill modify my tp 1.07 to 1.06
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