Forex Weekly Report 07-06-2020

Hello comrades! The most wanted day for people is Friday, for me it is today, the day I write the report for you! This week we have interesting developments for commodities. I also turned an idea to improve trend change detection using cot data in a tool. Follow me to the end and you will know more about this. Ready? So let’s do it!

I talked some posts ago about economic recovery and how Trump is playing a good game to stay in the house for 4 more years.  Things are happening and it’s happening fast, unexpected climb in American payrolls added a fresh wind to global equities rally.

…China’s trade surplus surged to a record in May as exports fell less than expected, helped by an increase in medical-related sales. Elsewhere, oil looks to extend gains after rising for six straight weeks, as OPEC agreed to a one-month extension of its record oil-production cuts…

…it’s difficult to see what could stand in the way of the emerging-market rally , at least in the coming days…  Source: Bloomberg

This comes well aligned with some COT Data signals we got this week.

MSCI EMERGING MKTS MINI INDEX – BUY SIGNAL

The most powerful and strong emerging markets economies are commodities based. We have one of the biggest commodities consumer with a heating economy and commodities producers with an extremely weak currency. This is the perfect receipt for our trading. Check in this post a brief explanation about MSCI EMERGING MKTS INDEX.

Check how we have commodities that are related to consumption and inflation with an increase in their long positions.

Look only at the MSCI Index we must expect the following currencies to gain:

1. RUB
2. ZAR
3. MXN
4. BRL

If you pay attention to last week’s report you will see that we had a sell signal for USDRUB. So things are aligning. Also carry these currencies is a good deal as the swaps as super positive.

USDRUB WEEKLY CHART

USDMXN WEEKLY CHART

We had an extremely successful call trading USDMXN just some weeks ago and I can see more downside coming.

Now, look at some commodities the situation is pretty similar. COTTON, SUGAR and ORANGE JUICE

COTTON WEEKLY CHART

SUGAR WEEKLY CHART

Sugar we already have a running position.

ORANGE JUICE WEEKLY CHART

BLOOMBERG COMMODITY INDEX – POSSIBLE BOTTOM

While I was migrating the COT Data Intelligence to our dashboard I had and idea. Apply a concept from cointegration trading to Non-Commercials net positions and estimate and expected dates when big speculators would change their bias. No surprise we had a bias change for the commodity index on 02-06-2020, last Cot Date release. This gives extra guidance and another layer of confirmation for our analysis.

nzdcad – POSSIBLE TOP

Using this news acquired knowledge and tool, I could see another signal. NZDCAD completed the bullish cycle and we should expect a retread from here. No extreme has shown to us yet, but we should remain vigilant for the other two reasons.

1. Short Signals for a dairy product -> Understand NZD correlation
2. OIL upside expected as OPEC agreed to a one-month
   extension of its record oil-production cuts.

COT DATA – NO EXTREME

TRADING PLAN

Well, Well well! That’s it! This a commemorative edition of the FX Weekly report. Our quant-trading community just hit the milestone of 50 paying members. If you are a member I made available on the download area the Support/demand indicator for cTrader and TradingView if you are not. What are you waiting for? Join now!

I want to thank the support guys! Thanks for believing in the revolution I am proposing. I need to add value to those and the Forex weekly report slightly changed the format, the trading plans will be now discussed and posted on our weekly zoom meeting.

Thank you again, my friends! I hope you all a great week of trading!

Best Regards,

Leo Hermoso