Commitment of Traders – The Basics
The Commitments of Traders (CoT) is a weekly report released by the Commodity Futures Trading Commission (CFTC). The CoT report outlines how different traders are positioned in the futures markets. There are two main types of traders in a CoT report: commercials and money managers.
Commercials are the producers and users of a commodity that use the futures markets to hedge. A commercial producer in the corn market could be a farmer who sells corn futures to lock in his selling price. Commercial traders are considered the “smart money” since they are in tune with the physical commodity business and likely have superior supply/demand information. The other main CoT trader type, money managers, comprises hedge funds, mutual funds, and commodity trading advisors. These speculative traders have no interest in the underlying physical commodity business.
CoT data is most meaningful at extremes when either commercial traders or speculators are super net long or net short. The charts below are mostly self-explanatory by looking at the color-coded type of traders. For a more detailed explanation, please see the bottom of this note.
DeMark Indicators basics at the bottom of this note
PLEASE NOTE: Last week had a data feed disruption on several markets. We get two data sets each day and combine them on the charts. We haven’t had a problem in quite a while, and our programmers will be working on updating them this week. The raw data on the monitors is correct; however, several charts have not been updated in a week. I just noticed this after this note was published.
Highlights and themes – waiting for 13’s
- The US Dollar decline that started several months ago continues, albeit recent action has been sideways. It’s likely going to be a quiet week and the Sequential 13’s might qualify in early 2023.
- The Dollar and other crosses have daily time frames DeMark Sequential Countdown’s getting late into the Countdown 13
- Crypto remains in a sideways “Waiting for the next shoe to drop” pattern.
Currency Sentiment Overview
Currency sentiment highlights show continued US Dollar weakness trending under 50%, the majority line.
US Dollar Indexes
DXY US Dollar Index daily still has the DeMark Sequential Countdown in progress
DXY US Dollar Index weekly now has the buy Setup 9 and if this reverses up after the daily Sequential 13 that would be just about text book.
Bloomberg US Dollar Index daily just like the DXY Index has a pending Sequential
Bloomberg US Dollar Index weekly. There is a risk of a continuation lower after the Setup 9 with a Sequential Countdown starting. We’ll have to see if this happens.
US Dollar bullish sentiment trended for a year in the bullish zone, and then when it broke 60% to 50% the trend changed.
US Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
Bitcoin and Ethereum
Bitcoin Daily remains in a sideways “waiting for another shoe ready to drop” pattern
Bitcoin Bullish Sentiment remains under pressure
Ethereum Daily similar look lacking a pulse
Major USD Crosses
EURUSD Euro / US Dollar still has the potential for limited upside to complete the Sequential sell Countdown 13
Euro bullish sentiment trending up
Euro Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
GBPUSD British Pound Sterling / US Dollar. Take a look at the requirement for the buy Setup 9
British Pound Sterling bullish sentiment slightly weakening
British Pound Sterling Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
AUDUSD Australian Dollar / US Dollar sideways holding 0.66
Australian Dollar bullish sentiment stalling
Australian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCAD US Dollar / Canadian Dollar
Canadian Dollar bullish sentiment remains under pressure
Canadian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCHF US Dollar / Swiss Franc trending and could see the Sequential buy Countdown 13 in the coming weeks.
Swiss Franc bullish sentiment remains under 50%
Swiss Franc Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDJPY Japanese Yen Daily could see the Sequential buy Countdown 13 in progress and complete in the coming weeks.
Japanese Yen Bullish Sentiment still trending up
Japanese Yen Commitment of Traders
USDNZD New Zealand Dollar Daily with an important DeMark Setup qualifier explanation on the chart
New Zealand Dollar Bullish Sentiment remains in overbought zone
New Zealand Dollar Commitment of Traders
RISK On Risk Off
This cross is often used as a risk-on / risk-off indicator
EURAUD Euro / Australian Dollar
Three major Yen crosses
EURJPY Euro / Japanese Yen
GBPJPY British Pound Sterling / Japanese Yen
AUDJPY Australian Dollar / Japanese Yen
US Dollar vs Emerging Markets
USDTRY US Dollar / Turkish Lira
USDBRL US Dollar / Brazilian Real
Brazilian Real Commitment of Traders could turn net short soon
USDMXN US Dollar / Mexican Peso
Mexican Peso bullish sentiment has been in the overbought zone
Mexican Peso Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. Big change!
USDZAR US Dollar / South African Rand
USDCNH US Dollar / Chinese Offshore Renminbi (Yuan)
DeMark Sequential Basics from Bloomberg
More detailed Commitment of Traders explanation
