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
Highlights and themes
It’s been really simple. The US Dollar sentiment remains oversold with DeMark buy Countdown 13’s in play with several crosses including Euro and Yen and exhaustion signals in play. With so many other markets and assets correlated with the Dollar, it will be very important to respect a reversal. As usual, I will have the US Dollar on First Call. Crypto has had a good run in the last two weeks after I spotted the upside Sequential Countdown starting. Now we should watch for upside DeMark exhaustion Countdown 13’s nearing.
Currency Sentiment Overview
Currency sentiment highlights still shows US Dollar sentiment oversold at 20%. Bitcoin made it to the midpoint 50% level and is getting closer to DeMark exhaustion signals so this might be limited.
US Dollar Indexes
DXY US Dollar Index daily has the Combo 13 still in play in downside wave 5. A reversal from here is still probable.
US Dollar bullish sentiment remains oversold under pressure.
US Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. Will the current Sequential continue?
Bitcoin Daily has had a good run in the last few weeks when I spotted the new Sequential Countdown continuing the upside after the Setup 9. It’s late in the Countdowns and should get the Sequential and maybe Combo 13’s this week. There is a new Aggressive Sequential that is giving an early heads up with coming Sequential exhaustion.
Bitcoin Bullish Sentiment made it to the midpoint 50% level. It hit 70% at the last peak.
Ethereum Daily also has a new Aggressive Sequential 13 that worked well at its last peak.
Major USD Crosses
EURUSD Euro / US Dollar also has potential for a reversal
Euro bullish sentiment has been elevated. Watch for the reversal under the 20 day moving average of sentiment for a potential confirmation of reversal
Euro Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
GBPUSD British Pound Sterling / US Dollar still has a lower high wave 2 of 5. If this makes a new high, it will revert back to the upside wave 5 and the downside patter will cancel
British Pound Sterling bullish sentiment made a new high although price did not
British Pound Sterling Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
AUDUSD Australian Dollar / US Dollar
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 might just sneak higher
Canadian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCHF US Dollar / Swiss Franc still has reveral potential
Swiss Franc bullish sentiment continues to stall at 50%
Swiss Franc Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDJPY Japanese Yen still has the potential to reverse.
Japanese Yen Bullish Sentiment stalling and breaking the 20-day moving average of sentiment is possible and then watch 50%.
Japanese Yen Commitment of Traders has seen large speculators significantly decrease short exposure
USDNZD New Zealand Dollar at support with new buy Setup 9. Important to watch if this breaks or bounces this week.
New Zealand Dollar Bullish Sentiment
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 – potential for reversal vs Yen
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
USDMXN US Dollar / Mexican Peso
Mexican Peso bullish sentiment remains in overbought zone
Mexican Peso Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDZAR US Dollar / South African Rand reversed however Friday gave back some gains
USDCNH US Dollar / Chinese Offshore Renminbi (Yuan) still has some exhaustion signals pending.