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Sunday, July 13, 2025

Analysis of the Japanese Yen COT Report (as of 8 July 2025)


 

Key Observations:

  1. Open Interest & Market Activity

    • Total Open Interest: 308,621 contracts (↑3,680 from prior week).

    • Number of Traders: 133 (indicating concentrated participation).

  2. Positioning by Trader Category

    • Dealer Intermediaries (Banks/Market Makers):

      • Net Short Dominance: 65.9% of Open Interest (203,380 contracts short vs. 9,523 long).

      • Significance: Dealers are heavily hedging or betting against the JPY, suggesting expectations of further JPY weakness.

    • Asset Managers/Institutional Investors:

      • Net Long Bias: 36.6% of Open Interest (112,913 long vs. 25,159 short).

      • Spread Positions: 1.6% (4,968 contracts), indicating some hedging.

      • Implication: Institutions are bullish on JPY, possibly anticipating a reversal or safe-haven demand.

    • Leveraged Funds (Hedge Funds/CTAs):

      • Moderate Net Long: 13.8% long (42,605) vs. 10.4% short (32,223).

      • Spread Activity: 1.6% (4,874 contracts), showing mixed directional bets.

      • Context: Funds are slightly bullish but less committed than asset managers.

    • Other Reportables & Nonreportable Positions:

      • Other Reportables: Strong net long (30.0% long vs. 3.1% short).

      • Nonreportable (Small Traders): Net long (13.3% long vs. 9.2% short).

  3. Long vs. Short Breakdown

    • Net Short Pressure: Dealers dominate shorts, while Asset Managers and Others drive longs.

    • Market Sentiment: Divergence between dealers (bearish) and asset managers (bullish) signals potential volatility.

Interpretation & Implications for JPY:

  • Bearish Pressure (Short-Term): Dealers’ extreme short positions may keep JPY weak, especially if driven by carry trades or BoJ policy expectations.

  • Bullish Potential (Medium-Term): Asset managers’ large longs could indicate expectations of a JPY rebound, possibly due to risk-off events or USD weakness.

  • Watch for Reversals: If leveraged funds shift to align with asset managers, JPY may rally.

Trading Considerations:

  • Short-Term: JPY may remain under pressure (align with dealer positioning).

  • Long-Term: Monitor for shifts in institutional flows or macroeconomic catalysts (e.g., BoJ policy changes, global risk sentiment).

British Pound COT Report Analysis (as of 8 July 2025)

 


Key Observations:

  1. Open Interest (OI):

    • Total OI: 191,557 contracts (↑12,868 from prior week).

    • Leveraged Funds dominate long positions (36.2%), while Asset Managers lead short exposure (41.6%).

  2. Positioning by Trader Category:

    • Asset Managers/Institutional:

      • Long: 66,611 (34.8% of OI) | Short: 79,765 (41.6% of OI).

      • Net Short: -13,154 contracts (bearish bias).

    • Leveraged Funds (e.g., hedge funds):

      • Long: 69,294 (36.2% of OI) | Short: 32,645 (17.0% of OI).

      • Net Long: +36,649 contracts (strong bullish stance).

    • Dealers (Banks/Brokers):

      • Long: 8,829 | Short: 39,841 → Net Short: -31,012 (typical for dealers to hedge).

  3. Changes vs. Prior Week (Implied Shifts):

    • Leveraged Funds increased longs by 14,502 contracts and shorts by 14,061, reinforcing bullish momentum.

    • Asset Managers reduced longs slightly (+5,020) but added 11,248 shorts, deepening net shorts.

    • Dealers trimmed shorts (-14,107), possibly unwinding hedges.

  4. Non-Reportable Positions (Small Traders):

    • Net Long: +10,348 (36,635 long vs. 26,287 short) → Retail/small speculators are bullish.


Interpretation & Market Implications:

  • Bullish Pressure: Leveraged funds and small traders are heavily net long, suggesting speculative demand for GBP.

  • Bearish Counterbalance: Asset managers remain net short, possibly hedging or expressing macroeconomic caution.

  • Price Outlook: Conflicting signals, but short-term bullish bias likely dominates due to leveraged funds’ aggressive positioning.

Tactical Notes:

  • Watch for profit-taking by leveraged funds if GBP rallies further.

  • Dealer net shorts (-31K contracts) may act as a contrarian indicator (dealers often fade retail trends).

Analysis of the Euro FX COT Report (as of 8 July 2025)


 

Key Observations:

  1. Open Interest (OI): 885,847 contracts (↑126,816 from prior week) – strong increase, indicating heightened market activity.

  2. Total Traders: 383 (↓ likely from prior week) – suggests consolidation among larger players.


Positioning Breakdown:

1. Dealers (Banks/Market Makers)

  • Net Short Dominance: Dealers hold 61.6% short vs. 5.1% long (496,248 vs. 41,200 contracts).

    • Implication: Major banks are heavily betting against the Euro, likely hedging or anticipating downside.

2. Asset Managers/Institutional Investors

  • Net Long Bias: 57.6% long (464,484 contracts) vs. 14.3% short.

    • Implication: Big money (pension funds, insurers) is bullish on the Euro, possibly expecting ECB policy shifts or USD weakness.

3. Leveraged Funds (Hedge Funds/CTAs)

  • Moderate Net Long: 13.1% long (105,233) vs. 9.4% short (76,110).

    • Implication: Hedge funds are cautiously long, but not aggressively so.

4. Other Reportables & Nonreportable Positions

  • Small Traders (Nonreportable): 12.3% long – retail/small speculators are net long but less influential.


Key Takeaways:

  • Divergence Between Groups:

    • Dealers (short) vs. Asset Managers (long) – Classic "smart money vs. dumb money" conflict. Dealers often hedge, while asset managers take directional bets.

  • Euro Sentiment: Mixed. Large specs are bullish, but dealers’ heavy shorts suggest institutional caution.

  • Price Action Context:

    • If Euro is rising, asset managers may drive further gains until dealers cover shorts.

    • If Euro falls, dealer shorts could accelerate the drop.

Tactical Outlook:

  • Bullish Scenario: A break higher could force dealer short-covering, amplifying gains.

  • Bearish Scenario: Dealers’ dominance may keep a lid on rallies, especially if macro risks (e.g., ECB dovishness) emerge.

Watch For: Changes in dealer positioning (short covering) or asset manager profit-taking.

Analysis of Gold Futures COT Report (as of 8 July 2025)

 


Key Observations:

  1. Open Interest & Market Activity

    • Total Open Interest: 443,144 contracts (↑15,482 from previous week).

    • Number of Traders: 299 (indicating broad participation).

    • Managed Money (Hedge Funds/Speculators) holds the largest long exposure (37.2%), while Swap Dealers dominate short positions (51.2%).

  2. Positioning by Trader Category

    • Managed Money (Speculators):

      • Longs: 164,685 (↑401) – Bullish sentiment remains strong.

      • Shorts: 35,743 (↑11,017) – Some hedging/shorting activity.

      • Net Long: +128,942 contracts (bullish bias, but shorts increased).

    • Swap Dealers (Banks/Institutions):

      • Shorts: 226,901 (↑12,085) – Heavy hedging/professional selling.

      • Longs: 35,359 (↓1,001) – Slight reduction in bullish bets.

    • Producers/Merchants (Commercials):

      • Shorts: 60,427 (↓991) – Slight reduction in hedging.

      • Longs: 13,615 (↑14,610) – Minor increase in bullish hedging.

    • Other Reportables & Small Traders:

      • Other Reportables increased longs (97,000, ↑13,455).

      • Nonreportable (Retail Traders) hold 56,291 longs (↑12,907), showing retail bullishness.

  3. Market Sentiment Implications

    • Bullish Factors:

      • Managed Money remains heavily net long (speculative bullishness).

      • Retail traders (Nonreportable) increased longs.

    • Bearish Factors:

      • Swap Dealers hold a massive short position (often a contrarian indicator).

      • Managed Money shorts increased, suggesting some caution.

Conclusion:

  • Gold remains in a bullish trend (supported by speculators and retail traders).

  • However, Swap Dealers’ extreme short positioning warns of potential pullbacks if profit-taking occurs.

  • Watch for: A sustained rise in Managed Money shorts or Swap Dealer covering (which could signal a reversal).

Analysis of the CFTC COT Report for the Dollar Index (as of 8 July 2025)

 

Key Data Points:

  • Open Interest (OI): 35,076 contracts

  • Total Traders: 128

  • Total Changes: 41,210


Positioning by Trader Category:

  1. Dealers (Typically Banks/Market Makers)

    • Long Positions: 9,400 (26.8% of OI)

    • Short Positions: 0 (0.0% of OI)

    • Spread Positions: 86 (0.2% of OI)

    • Key Takeaway: Dealers are heavily net long, suggesting they are betting on USD strength or hedging against weakness.

  2. Asset Managers/Institutional Investors

    • Long Positions: 3,241 (9.2% of OI)

    • Short Positions: 11,462 (32.7% of OI)

    • Spread Positions: 1,765 (5.0% of OI)

    • Key Takeaway: Asset managers are significantly net short, indicating bearish sentiment toward the USD.

  3. Leveraged Funds (Hedge Funds/CTAs)

    • Long Positions: 13,952 (39.8% of OI)

    • Short Positions: 12,344 (35.2% of OI)

    • Spread Positions: 1,204 (3.4% of OI)

    • Key Takeaway: Leveraged funds are slightly net long, but the near-balance suggests uncertainty or a neutral stance.

  4. Other Reportables (Large Speculators Not Elsewhere Classified)

    • Long Positions: 2,195 (6.3% of OI)

    • Short Positions: 4,206 (12.0% of OI)

    • Key Takeaway: Net short positioning, aligning with asset managers' bearish outlook.

  5. Nonreportable Positions (Small Speculators)

    • Long Positions: 3,233 (9.2% of OI)

    • Short Positions: 4,009 (11.4% of OI)

    • Key Takeaway: Small traders are also net short, reinforcing the bearish bias.


Net Positioning Summary:

CategoryNet Position (Long - Short)Sentiment
Dealers+9,400 (Strong Net Long)Bullish USD
Asset Managers-8,221 (Strong Net Short)Bearish USD
Leveraged Funds+1,608 (Slight Net Long)Neutral/Bullish
Other Reportables-2,011 (Net Short)Bearish USD
Nonreportable-776 (Net Short)Bearish USD

Key Insights:

  1. Divergence Between Dealers and Asset Managers:

    • Dealers (typically "smart money") are heavily long, while asset managers ("big money") are heavily short. This divergence often signals a potential inflection point in the market.

    • Historically, when dealers take extreme positions against asset managers, it can precede reversals.

  2. Leveraged Funds Neutral:

    • Hedge funds are nearly balanced, suggesting no strong directional bias.

  3. Retail/Small Traders Bearish:

    • Small speculators are net short, which is often a contrarian indicator (retail traders tend to be wrong at extremes).

  4. Open Interest & Changes:

    • High open interest (35,076) and total changes (41,210) indicate active trading, but the net positioning suggests mixed sentiment.


Market Implications:

  • Bullish Case (USD Strength):

    • If dealers’ net long position is correct, the USD could rally, especially if leveraged funds shift to more longs.

    • A reversal in asset managers’ shorts could amplify upside momentum.

  • Bearish Case (USD Weakness):

    • If asset managers’ net shorts prevail, the USD could decline further, especially if dealers reduce longs.

    • A breakdown below key support levels may trigger follow-through selling.

  • Neutral/Consolidation Scenario:

    • The mixed signals (dealers long vs. asset managers short) may lead to range-bound trading until a clearer trend emerges.


Actionable Takeaways:

  • Watch for Reversals: Monitor if asset managers start covering shorts or dealers reduce longs.

  • Key Levels: Technical analysis (support/resistance) will be crucial alongside COT data.

  • Macro Drivers: Fed policy, risk sentiment, and global growth trends will influence USD direction.

This report suggests a tug-of-war between "smart money" (dealers) and institutional investors, making the USD index prone to volatility. A breakout in either direction could be significant.


Tuesday, July 8, 2025

Bullish Max Butterfly Harmonics Pattern

 A bullish Max Butterfly pattern emerged on GBPUSD 1hr chart

 


 

Ichimoku Kinko Hyo trade on Japanese cross pairs

 We have very strong bullish trend on several japanese cross currency pairs.

Have a look at below charts attached :

CHFJPY Weekly Chart. This pair looks trending very high

 

EURJPY daily chart.


 USDJPY H4 chart. It looks price might get back to the high of 148.00.


 GBPJPY Weekly chart. Future cloud change color signalling a bullish run.