Forex Weekly Report 12-10-2019

Hello, again my friends, this week I added a new feature to my cot toolbox and this will help me capture better moves and you will enjoy this too. So let’s cut the talk and go to what matters! Trading!



First of all you if like Trump for not, I don’t care, but you can’t let your political view or “I don’t like this guy” to numb your vision about the markets and worse create a bias based on personal beliefs, if you are doing this, the stop loss is waiting for you at the end of your next trade. So why I am talking about Trump? Because you need to read this tweet from Trinh Nguyen @Trinhnomics! Go there and read.

Done!? And we saw last Friday China and USA reaching a deal and this will benefit Australia a LOT!

In 2009 China surpassed Japan to become Australia’s largest export market, with total merchandise exports to China valued at A$42.4 billion, an increase of 31.2 per cent over the previous year. Resources continue to underpin Australia’s exports to China. Australia exported 266.2 million tonnes of iron ore to China in 2009 (A$21.7 billion in value terms), an increase of 45.2 per cent over the same period in 2008. Australia’s coal exports to China grew by 1000 per cent last year to become our second largest export commodity, behind iron ore. Over the last 12 months, two further LNG contracts have been signed for the supply of Australian gas to Chinese terminals. The future prospects for continued growth in our resources exports to China are good. source: China Australian Embassy 

So with China coming back to the path of growth, Australia will export more and consequently, the demand for AUD will increase. Also, this cheap AUD is working to boost price competitiveness & external demand for goods & services.


AUD had a cut of more than 10% on net short positions from last week to this one, this alone is huge, add to what we discussed above, well I think we have an opportunity here.

In the chart, you see NET SHORT Positions being reduced and Commercial COT Index pushing again to the short side. Remember commercials are counter-trend traders.


If you take AUDUSD from the Price Risk/Reward point of View its an operation that worth itself. I am placing the following orders. Stop Loss of all orders is moved since the new one is triggered.

AUD was a great mover this week and I have to say we have even better AUD pairs to play then AUDUSD. This will be discussed with more details in this week’s trading plan, available for members. But I am posting here the list with all signals I got with this new idea I have using COT Data.

GPB Pairs – Bullish BIAS

I am bullish GBP for the third week. You can check here and here.

“Ok, Leo, I think this is a little bit of luck because we had the Brexit talks”

I am not the owner of the truth, but even a Formule one car is worthless without gasoline. My bullishness is based only on what big speculators, smart money, big boyz call them whatever you want, but these guys have the gasoline(money) to move our car!

With this example in mind, I am choosing GBPJPY to trade. GBP players still cutting shorts, but the Brexit still looming and JPY short positions are also being cut, and JPY is related to the change in risk perception.

Pros for GBP:

  1. Orderly Brexit taking Place
  2. UK Supreme Court: Prorogation of Parliament was unlawful
  3. Plans for a no-deal more distant
  4. Trade War deal ( this is positive for everyone except JPY)

Cons JPY:

  • Trade War -> Investor will sell JPY to fund others trades like BUY SP500
  • Japan deflation increasing(more easing)
  • PPI Falling from -1.1 YoY to -0.9% in September
  • Core machine orders -14.5% -> No Rebound in H2

Also, read this from Deutsche Bank

Up until now,the UK has contributed to the budget andUK regions received funds. Also,macro-economic averages used to determine eligibility for fundsare based on the EU28. Thus, Brexit could mean losing a net contributor to the budget


One last thing before the trade, I promise. We are one week until the EU council meeting, at which it was hoped a Brexit deal would be agreed and ready to be signed off by all sides before the 31 October deadline. Here is the schedule:

So we saw that bad news for GBP can be offset with good news for the World(trade war) and already bad news for Japan as we see above, this makes me believe that if we see a downside move it will be with less intensity than the one we have to the downside, also the probability for an up move is greater!



This is one way of trade this

Remember those two things I told you not to forget!? Go back and read again and see the chart again! See how EUR is GBP dependant!? No-deal Brexit is bad!? Hmmm, I don’t know, maybe short term for the banks, but the UK leaving Eurozone is a huge deal! An amazing one! So imagine what would happen to this when we have a Brexit. That’s a lot of pips here 😉


Ok, and if you feel like reading about EUR I will leave this report here for you! ECB Article

ORANGE JUICE – bullish bias

Remember my call to buy orange juice? During this week we saw a major bullish run of almost 7%, just to retrace everything. But for you that haven’t taken the trade, this is very good news! Speculators cut more of their shorts and the reasoning discussed in the call has not changed.


COCOA – BUllish bias

Last week we discussed COCOA  and the trade is going accordingly to the plan, also this week I have and interesting COT Signal, It’s a “BEARISH PULLBACK” signal, alerting us that the bearish pullback is over and the bullish trend is about to resume. The signal is triggered when we have a sudden acceleration in commercials short positions, they are more bearish now, remember commercials are counter trending traders. Go to our last report to check the COCOA trading plan! I think this week we will get our orders filled!

That’s it, my friends, I hope you can make some money from this piece of information I posted here.

This is not the time to be afraid, we are in very interesting points to enter the markets and have a great year-end and also good money for 2020. So when the profits start running into your account, do not close your positions, keep strong and focused and maximize your profits. Believe in COT data and don’t focus on short term news and even don’t give credits for traders/analysts that are stubborn and maintain a bias whatever the situation is! Most of the time these guys are in losses trying to convince themselves they are right! Not taking markets seriously and sarcasm is a strong signal of a trader running in losses, so just stay away!

My trading plan this week is super simple, just focus on longs at AUD and GBP against a basket of currencies. Playing Supply Breakouts and buying demand zones.

You all know I have a chatroom, I am also coding new features for it and even a dashboard with all information like last supply/demand, cot signals, twitter sentiment, news search, and a summary, that will a snapshot of most relevant info about the currency you choose.

Check the new feature I added this week to the room! We already had a bot sending alerts about supply/demand zones, now you can as the bot to send you the chart he is looking at:

Have a great week!

Best Regards

Leo Hermoso


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