Hello, my friends! If this is your first time here, welcome! If you don’t follow me on twitter yet, do it now, this way you will get updates on my trades and positions. The year is already running out of days, so let’s make this another great week! One piece of advice, the traded volume tends to get lower in the time of the year, so don’t be the fool that will buy the other trader a Xmas gift, trade smaller than you use, if you can, don’t trade.
BIG MOVERS
This table shows financial instruments that had a 15% change in its non-commercial net position from one week to another, so things that are gaining momentum and should give us opportunities to trade with a direction in mind.
GBPUSD – BULLISH BIAS
From the currencies, cable is the only will that is signaling something for us. Last week I did a bullish call for it, unfortunately, I have not surfed all the move, because I closed my positions right before the release of the poll.
“Why? Are you stupid, or what? You said it’s going to go higher and closed it right before a major event that could ( and did) drive the pair higher?”
Yes, I did! My reasoning to buy pound is based on data and not on “events” the tail risk (that big moves that happen once and a while and can blow one’s account) was very high, so I preferred to stay out. But the good news, my friends, is the bullish momentum is persistent and even before that big event, more shorts were close on GBPUSD. So we are going to buy it again this week. Follow the data and the plan.
Price Charts – weekly
The same trend we see in COT Data is also present in prices, the bullish momentum is strong and keeps increasing. What I am seeing now is a cluster of stops will build bellow 1.32927, this is the logic and cheap zone for stops longs. So the first thing we need to have in mind, our idea is valid until this point is not taken, ok? And we are just really buying when the price is above 1.33814, that is the High Price os the actual supply zone. 
Price Charts – 4 hours
You may not, but the markets certainly have it! “MEMORY”. Prices usually trade with the same structure, in an infinite zig-zag. A supply turns into a demand zone, and when it comebacks we say it was a pullback and so on. Right now we have one of these structures happening on GBPUSD. A previous demand zone that was broken is now working as a demand zone, and the odds are great that this will get filled. Two things to observe.
- It’s below our line in the sand
- It’s not a good buying point
The pullback is happening bellow other highs and this can put pressure on buyers, so it’s much better we wait the breakout of 1.33814 zones to buy.
BIG SPECULATORS NET POSITIONS
For the second week in a row we have a 15% change in non-commercials net positions, a cut of 7951 contracts, this is equivalent to almost 500 million pounds, huge profit-taking. If you are a more attentive reader, you will see that the major part of these 7951 contracts were not short cuts, but longs added, a clear signal that the bias has changed, the last time we had such big long positions from specs were in 23-04-2019 and we were building a bullish trend, interrupted by some market event.
position correlation with price
This is an interesting and neat study made by a friend and good people to follow on twitter, Lars. He made some nice transformations with speculators’ net position and was able to find the correlation between price and positions. One thing interesting to see is the z-score just changed to the bullish side now, so this gives more certain about this bullishness.
trading plan
Remember last week!? You don’t need fancy indicators or thousands of lines, just check for previous turning points and trade there! Wait it breaks and buy on the pullback, but you need to have f****** patience!
Weekly
1 hour
SILVER | XAGUSD – BEARISH BIAS
After 5 weeks of big speculators building a long position, we finally see a big cut in the longs with an interesting caveat:
- Longs were cut | 5360 contracts
- Shorts were added | 6038 contracts
- Net Position change | 11398 long contracts cut
Generally, we see net positions changes with only one side of speculators building positions or adding longs or cutting shorts and vice-versa, but this time we are seeing that the overall bias has changed, bears are even more bearish and bulls are not certain anymore about their bets. An explosive move may be about to take place.
Silver Non-Commercials net position
MY TRADING PLAN
Friends, you must remember we have tons of risk events deescalating read Brexit and Trade war, so we must see profit-taking in risks assets like silver and gold, however, remember what I told you about trading this time of the year, ok?
NZDUSD | NZDJPY BULLISH BIAS
I am just doing a brief follow-up, so you know that last week’s signals still valid!
Friends, I know this week’s reports were not that long, but not much happened from COT DATA point of view, also I am taking the foot out of gas pedal these last days of the year and the reason is the liquidity get scarce, so little will happen and some event can make a huge price oscillation making stops useless.
I also want to say that I have made available a free version of the cot tool, the one I use to make all analysis and charts I post here. Access it here -> COT DATA CHARTS AND SIGNALS
That’s it my friends! I hope this can add value to you in some way. If you have any kind of doubts or questions please comment here, I am looking forward to replying to you.
“Hey Leo wait, I want to see your analysis for more pairs”
Very well my friend, join me in my chatroom.
Have a great weekend you all!
My best regards,
Leo Hermoso
