Well, I was swamped last week so I never got to the COT. No matter, with Non-Farm Payrolls out on Friday, I don’t think it was that big of a deal; and, the previous week’s report sufficed just fine.
About the COT and coming up-to-speed, Let’s get busy. The latest charts ae here: http://www.tradesight.com/wp-content/uploads/2011/04/COT-4-01-111.pdf
The commodity currencies have been climbing and the NZD has moved 5% in two weeks. That’s just ridiculous. But, the pair is at a .786 Fibonacci retracement level per the last daily chart high and low, and is pretty much overbought. I’m watching closely to see if it moves lower, retracing to a Fibonacci level of the last leg up. Correlate this with the COT chart, and you’ll find the kiwi WAS at extremes: the commercials and specs are 180-degrees apart, where the commercials had been buyers and specs sellers. But this changed two-weeks ago and the COT gave us a heads up. So, even with NZD at the current .786 Fibonacci level, if it does move lower from here, I believe it is temporary (and, again, will be a retrace of this last leg up). Also note the daily trend line hasn’t been so much as tested. Hence, the trend is still up.
The aussie is also at extremes, with the commercials net short and the specs net long. And, based on the COT and price charts, I’m looking for AUD to make a nice move down from these highs. CAD looks the same, but the inverse is true, i.e., I looking for is to move up. Like NZD, note the daily trend lines for both remain untested, at this point. So, conservative and/or longer term traders might want to wait for confirmation signals before taking a position. Just a thought and this totally depends on one’s style of trading.
The swissy and euro are in a similar, but inverse, situation. And, when looking at the USD Index, both appear close to a turn around. Note the commercials and specs are 180-degrees out on the Index, which, as I’ve mentioned in the past, presages a USD turn-around. Yes, I know everyone hates the greenback, but guess what?
I’m not “everyone” and neither are you. We’re a lot smarter and prefer to think contrarain, right?
Right ;- )
About the yen, well…. I’m not a fan of interventions, so I’m going to leave this one alone. Other than carry trades (playing the interest rate differential); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES one may very well be living on the edge by trading the yen. You just never know when you’ll get a price spike, which, if you’re on the wrong side of the trade, may feel like a spike in the forehead. I’m just sayin’….
Gold and silver? Momentum is slowing to the upside, but gold’s COT shows the commercials selling and the specs buying. As for silver, its COT is pretty much a plate of spaghetti. Yes, per the price charts, it’s still a long. But, we’ll see where it goes, as it is overbought and (as I already mentioned) momentum is slowing.
That’s it for this week. Feel free to comment.
Be well and good trading!