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
- The US dollar declined hard on Friday on a clear risk-on type of day.
- I’m still watching for some Dollar crosses to get DeMark Sequential Countdown 13s and possibly Combo 13s. Notably, Euro and Yen still have a little more upside to qualify the Sequential 13’s.
- Crypto has been trading sideways and could get DeMark Setup 9’s on Monday. There is a possibility that further upside will start upside Sequential Countdowns. If this occurs, you’ll see it on each First Call note this week.
Currency Sentiment Overview
Currency sentiment highlights show what a risk-on day looks like with everything up with the US Dollar down.
US Dollar Indexes
DXY US Dollar Index daily has the recent Sequential and couldn’t hold above the 105 level and could move a little lower to qualify the pending Combo 13, and that would take some further weakness as the Combo needs new lows to qualify. The Combo 13 worked well at the top in September.
DXY US Dollar Index weekly did get the Setup 9 and has not started a new downside Sequential.
US Dollar bullish sentiment remains under pressure and hasn’t been able to recapture the 50% majority level
US Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
Crypto
Bitcoin Daily still trades sideways and could see a sell Setup 9 Monday
Bitcoin Bullish Sentiment has been under pressure since May
Ethereum Daily also could get a sell Setup 9 on Monday
Major USD Crosses
EURUSD Euro / US Dollar now on day 11 of 13 with the Sequential and has been one I mentioned I wanted to see qualify the Sequential 13 despite the DXY Index getting a Sequential 13
Euro bullish sentiment remains supportive for now
Euro Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
GBPUSD British Pound Sterling / US Dollar has started the downside Sequential Countdown and with the move up on Friday qualified a lower high wave 2 of 5 with a potential downside wave 3 price objective of 1.588 if and when Thursday’s (wave 1 yellow) breaks
British Pound Sterling bullish sentiment backed off the highs
British Pound Sterling Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
AUDUSD Australian Dollar / US Dollar did get the Sequential sell Countdown 13 last week lacking a reversal response so far
Australian Dollar bullish sentiment remains supportive although it’s found trouble here recently
Australian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCAD US Dollar / Canadian Dollar broke lower with a Propulsion downside target in sight
Canadian Dollar bullish sentiment still struggling
Canadian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCHF US Dollar / Swiss Franc has the pending Sequential that could qualify this week
Swiss Franc bullish sentiment remains under pressure
Swiss Franc Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDJPY Daily Japanese Yen. This is the one I want to see qualify the downside Sequential 13
Japanese Yen Bullish Sentiment stalling at recent highs
Japanese Yen Commitment of Traders
USDNZD Daily New Zealand Dollar
New Zealand Dollar Bullish Sentiment stalling after reaching extreme levels over 80%
New Zealand Commitment of Traders shows speculators set up long again
RISK On Risk Off
This cross is often used as a risk-on / risk-off indicator
EURAUD Euro / Australian Dollar reversal lower or hold support?
Three major Yen crosses
EURJPY Euro / Japanese Yen with lower highs
GBPJPY British Pound Sterling / Japanese Yen with lower highs
AUDJPY Australian Dollar / Japanese Yen with lower highs
US Dollar vs Emerging Markets
USDTRY US Dollar / Turkish Lira
USDBRL US Dollar / Brazilian Real
Brazilian Real Commitment of Traders with spike higher with speculators long exposure
USDMXN US Dollar / Mexican Peso nearly a new low
Mexican Peso bullish sentiment remains extreme at 88%
Mexican Peso Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDZAR US Dollar / South African Rand
USDCNH US Dollar / Chinese Offshore Renminbi (Yuan) got the Sequential buy Countdown and Setup 9.
DeMark Sequential Basics from Bloomberg
More detailed Commitment of Traders explanation
