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 is now bringing out the bears, calling for lower levels. It’s possible, looking at the weekly chart of the USD Index; however, if there is a risk-off with other markets – bonds and stocks like Friday, I could see a move back to the Dollar as a safe haven. Crypto has been inching higher and is nearing upside exhaustion but will need more upside first. Euro and Sterling increased and hit new highs Friday and reversed intraday. Watch the Yen as this might start weakening again but I have mixed signals on the chart. I will post the Yen chart often in the coming week.
Currency Sentiment Overview
Currency sentiment highlights show the US Dollar strong on Friday; however, it’s been trading under 50% for a while and remains under pressure until it recaptures the 50% mid-point level.
US Dollar Indexes
DXY US Dollar Index daily has drifted lower, making a new low on Friday. It reversed higher during the day to finish higher. If this does continue higher, a move over the 20 day is the first resistance at 102.27
DXY US Dollar Index weekly continues to be a concerning chart with the Sequential on week 7 of 13. There is an aggressive Sequential that also triggered ahead of the bottom in early 2021 and before the Sequential 13
Bloomberg US Dollar Index daily differs from the DXY as it has a Sequential in progress on day 6 of 13.
US Dollar bullish sentiment continues under pressure
US Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
Bitcoin and Ethereum
Bitcoin Daily has a Sequential in progress pending on day 6 of 13. It’s possible to see this continue higher to complete the Sequential. The Aggressive Sequential sell Countdown is good in volatile markets so this too could be a signal near a top
Bitcoin bullish sentiment stopped at the 70% level 4x now
Ethereum daily is closer to the Sequential sell Countdown on day 10 of 13
Major USD Crosses
EURUSD Euro / US Dollar hit a new high on Friday and reversed
Euro bullish sentiment with a negative divergence to watch. Higher price lower sentiment.
Euro Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
GBPUSD British Pound Sterling / US Dollar
British Pound Sterling bullish sentiment steady holding 50%
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 stalled
Australian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCAD US Dollar / Canadian Dollar on day 4 of 13 at support levels now
Canadian Dollar bullish sentiment hit a slight high for the last year
Canadian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCHF US Dollar / Swiss Franc drifting
Swiss Franc bullish sentiment hit a one year high last week
Swiss Franc Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDJPY Japanese Yen needs to be watched this week. I will post this chart often
Japanese Yen bullish sentiment weakening
Japanese Yen Commitment of Traders
USDNZD New Zealand Dollar with new Sequential sell Countdown 13 although watch the upside Propulsion target of 1.6762 if this 13 fails to reverse
New Zealand Dollar Bullish Sentiment drifting towards 50%
New Zealand Dollar commitment to traders
RISK On Risk Off
This cross is often used as a risk-on / risk-off indicator
EURAUD Euro / Australian Dollar is extended
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
USDMXN US Dollar / Mexican Peso
Mexican Peso bullish sentiment
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)
DeMark Sequential Basics from Bloomberg
detailed Commitment of Traders explanation
