COT information is a warning for the USD Fund Confusion. Long positions in the Euro, AUD, NZD, CAD and CHF are the highest in a year. In the past, one-sided issues have led to reversals.
The latest edition of the CFTC was released on October 13, 2009.
The COT index is the percentage difference between net estimates and net trades measured by a specific number of weeks (52 or 13). A reading of around 0 indicates that a low reading is occurring and that a reading of around 100 is occurring. Readings are for real currencies, not currency pairs. For example, reading the Canadian dollar 100 shows that the Canadian dollar is close to the highest (USDCAD is the lowest).
Number 95 or higher and 5 or less indicates bright red market potential. For example, the index rises to the extreme (close to 100) and increases the risk of reversal or extinction.
USD
Viewers continue to accumulate short films. The red line (approximate areas) is close to the highest levels reached in 2008. These places are obviously very extreme and change comes with great emotion. The question is whether it will happen soon.
Euro
The difference between estimates and trade is the largest since January 2008. A drop of about 600 ppi comes with this extreme. These are pre-investment conditions.
Pound Sterling
Oh the spectators will definitely play on the fall of the British pound. The short spots on the pod have reached an all-time high. Of course, this information was updated on Tuesday before the GBPUSD rally. The numbers were the same last week, so COT is a good choice over low GBPUSD. Next week's figures reflect a rally (reduction in the number of shorts ... perhaps significant).
Australian dollar
AUD Estimated long positions have been at an all-time high since mid-July 2008 after AUDUSD reached a high of 0.9850. Future traders are very long and have been around since mid-August. The investment alert is gone, but the only thing missing right now is investment.
New Zealand Dollars
Buying the NZD is not as extreme as the AUD in the historical context, but the position was very one-sided in October 2007. It is expected to undo soon.
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The long positions on the yen have become more extreme in recent weeks, warning of a change. This conversion point has occurred, so it supports the fall of the yen (USD / JPY will rise).
Canadian dollar
The longest positions in CAD were the highest since June 2008. CAD reached a record high compared to the USD at that time. The weekly candlestick design created a hammer, which is a reversal pattern of bullying. Choose to sell CAD (Buy USDCAD).
Swiss Franc
Long positions in Swiss franc have been at their highest level since December 2004. This season is the highest in CHF (USDCHF). Expect the same thing here.
Jamie Satellle publishes daily technical (core), COT analysis (Friday market close), Monday, Wednesday and Friday technical cross-exchange analysis (Euro and yen crossings) and daily trading strategies on market performance. He is the author of Forex Market Sentiment. Follow his daily market comments on the DailyFX Forex Stream.
Written by Jamie Satell
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