- EURUSD – PARITY AHEAD OF US
- AUDUSD – PING PONG MODE
- GBPUSD – PULLBACK AHEAD
- NZDUSD – PING PONG MODE
- USDCAD – T-MINUS 10
- USDCHF – SHORT SQUEEZE AHEAD
- USDJPY – A BULL PARTY
EURUSD – parity ahead of us
I am bringing you facts and truths! I have my CFTC COT data for EURUSD is from August 29, 2000. Am I bragging? Of course not, the data is free and available in CFTC Website ( if you ask nicely I can even share the formated and cleaned data with you). The reason I am telling you this is we are on uncharted territory. The last peak on non-commercials net positions was January 29, 2018, exactly 147318 net long contracts and 349632 Open Contracts(Open Interest). I don’t believe in coincidences, do you? That was exactly the Top of the EURUSD on Trump’s era: 1.25229 ( in the previous week we had a 1.25373 print).
In the next 10 weeks, EURUSD went nowhere. Applying the theory of Ornstein–Uhlenbeck process on top of non-commercials net position to calculate the half-life ( how long it takes to return to the average, I am using median) we have a surprising result. The calculations tell us that EURUSD can sustain a bullish outlook till 15-09-2020, its more 5 weeks from now. Considering the chaos and unpredictability of the markets, we can say that our calculations are pretty close to what happened in the past and what could happen again now. In 5 weeks non-commercials will control prices and take profit on most of the longs.
IMPULSES ANALYSED
What happened
Date | Event | Net Positon | TimeSpan Days |
|---|---|---|---|
| 05/11/2017 | Impulse Start | 86790 | |
| 24/01/2018 | Net Positions | Open Interest ATH | 147318 | 80 |
| 15/02/2018 | EURUSD 1000 pips Rally to 1.25554 | 143602 | 22 |
| 01/03/2018 | EURUSD 405 pips Drop | 126566 | 14 |
| 25/03/2020 | EURUSD 1919 pips Drop from Top | 55734 | 755 |
what is happening
Date | Event | Net Positon | TimeSpan Days |
|---|---|---|---|
| 23/04/2020 | Impulse Start | 86538 | |
| 04/08/2020 | Net Positions | Open Interest ATH | 185135 | 103 |
| 05/08/2020 | EURUSD 1193 pips Rally to 1.19160 | 185135 | 1 |
| 19/08/2020 | EURUSD 405 pips Drop 1.15129 | PROJECTION | 163171 | 14 |
| 13/09/2022 | EURUSD 1919 pips Drop from Top 0.9997 | PROJECTION | 71853 | 755 |
Net Positions Seasonality
In the last week’s report, I posted the seasonality charts on top of non-commercials net position, and the most correlated year with 2020 is 2009 and guess on what date it was the top of net positions!? September 29!!! Just 10 days from the projected date using the half-life approach.
WHAT I AM EXPECTING
AUDUSD – ping pong
Trading ranges are something that divides opinions one group says its the easiest while the other says it’s impossible. The message from the data is clear and loud! AUDUSD will range until November.
I separated some AUD charts and trading opportunities with its crosses.
- Fundamental Score is sitting at 50, completely neutral.
- Net positions are technically zero
- There is one shy technical short setup triggered on the weekly charts
- Some AUD Crosses at interesting levels
- CFTC COT Data Seasonality projecting sideways
- Prices Seasonality projecting sideways
Let’s play the range!
what i am expecting
nearby supply and demand zones
AUD CROSSES INSIDE SUPPLY ZONES
GBPUSD – pullback ahead
The pattern is intact: Shorts are added and in the next week closed. It’s starting looking to me this is battle bulls will win. They Are more comfortable, adding and closing, and looks like bears are holding shorts betting the price will drop, but just hoping, I can see no action. Eventually, this will happens and it will be more related to dollar strength then GBP itself. In favors of the bulls, we have fundamentals and seasonality.
Studying similarities in previous years it’s clear that we are in a bullish trend at infancy, but one common thing in all seasonality charts is a big pullback ahead of us. The 1.25 handle is on the cards again.
WHAT I AM EXPECTING
NZDUSD – PING PONG MODE
Australia and New Zealand have correlated economies. Most of the time it’s possible to use the same report for AUD and NZD.
New Zealand Dollar is also in play the range mode.
- Fundamental Score is sitting at 50, completely neutral.
- Net positions are technically zero
- There is one shy technical short setup triggered on the weekly charts
- Some NZD Crosses at interesting levels
- CFTC COT Data Seasonality projecting sideways
- Prices Seasonality projecting sideways
audnzd – showing how aud and nzd are highly correlated
nearby supply and demand zones
nzd crosses inside supply and demand zones
USDCAD – T-minus 10
Game changer on USDCAD shorts running and to the hills! 😀 They closed 12289 contracts or 38.7% of short positions. If this is not a squeeze, please tell me what it is! The open interest is not something that makes my eyes shinny, but it’s clear that the support was respected and an attempt to 1.38 will be made again.
The seasonality chart is incredible. If we do not consider the panic caused by corona I would say that 2020 is doing exactly what 2001 did. An upside movement from here is expected.
SEASONALITY
WHAT I AM EXPECTING
USDCHF – SHORT SQUEEZE AHEAD
Shorts are doing their best to break the current support zone, but commercial buying is halting the downtrend. I can easily see a massive short squeeze in the next weeks. August is not a month with “activity” for USDCHF, so I can see another try to take current lows, but if it fails 0.96500 is our next stop.
Technical overview
What I am expecting
USDJPY – A BULL PARTY
Make no mistakes! USDJPY is in full launch mode. If you look only at non-commercials open interest and positions crazy you think I am! (Tks Mr. Yoda). Sometimes non-reportable group plays a big role, and its also true that the trading industry is changing, not all banks have prop desks, most of them only take orders in behalf of clients, some of these clients fit in this group.
When you look at Commercials positions, you will see that open interest and net position increased. If you have a good memory you will remember the role of commercials, if not, got to the previous week’s report on USDJPY section and read it.
Highly correlated seasonality for Non-Commercials Net Positions CFTC COT Data and price returns playing in our favor.
what i am expecting
THANK YOU
The last week was awesome, I received a lot of support messages! That really motivated me. The intention of this report is to collaborate with the community, add value to your trading, and give north for those that are completely lost. It’s working.
Tell me a little bit, how the report is helping you and also, in your opinion, how it can be improved? what can be added or modified? I am hearing.
Catch you all next week.
Best regards
Leo Hermoso.
