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.

 

 

Analysis of Euro FX COT Report (24 June 2025)

 

Key Observations:

1. Open Interest (OI) & Market Activity:

   • Total OI: 762,607 contracts (↑16,746 from prior week).

   • Number of Traders: 306 (indicating moderate participation).

2. Dealers (Banks/Market Makers):

   • Extremely Net Short (Bearish EUR):

     • Short Positions: 458,976 (60.2% of OI, dominant force).

     • Long Positions: Only 31,477 (4.1%).

   • Implication: Dealers are heavily hedging or betting against EUR strength.

3. Asset Managers/Institutional Investors:

   • Strongly Net Long (Bullish EUR):

     • Long Positions: 458,163 (60.1% of OI, largest group).

     • Short Positions: 120,432 (15.8%).

   • Implication: Big money expects EUR appreciation, possibly due to ECB policy shifts or USD weakness.

4. Leveraged Funds (Hedge Funds/CTAs):

   • Moderately Net Long:

     • Long: 88,638 (11.6%) vs. Short: 67,545 (8.9%).

   • Implication: Speculative funds lean long but not aggressively.

5. Other Reportables & Nonreportables:

   • Other Reportables: Slightly net long (35,105 vs. 19,596).

   • Nonreportable Positions (Small Traders): Net long (94,870 vs. 41,704).

   • Implication: Retail/small traders are bullish, but their influence is limited.

---

Market Sentiment & Implications:

• Divergence Between Dealers and Asset Managers:

  • Dealers (banks) are heavily short, while institutions are heavily long. This suggests a battle between hedging flows (dealers) and fundamental bets (asset managers).

  • Historically, extreme dealer shorts can precede EUR rallies if positioning unwinds.

• EUR Outlook:

  • Bullish Case: If asset managers dominate, EUR could rise (e.g., if Fed cuts rates before ECB).

  • Bearish Risk: If dealers maintain/expand shorts, EUR may face downward pressure (e.g., if EU growth weakens).

• Technical Consideration:

  • High OI + rising longs from asset managers = potential for a short squeeze if EUR breaks key resistance.

---

Actionable Insight:

• Watch for Catalyst: ECB policy signals or US data to determine if dealer shorts cover (bullish EUR) or institutional longs exit (bearish).

• Contrarian Signal: Extreme dealer shorts could mean EUR is undervalued, but confirmation (e.g., price breakout) is needed.

Conclusion: The market is split, but institutional bullishness suggests upside potential if macro conditions align.

Analysis of the British Pound COT Report (24 June 205)

 

 

Key Data Overview

• Open Interest (OI): 179,898 contracts (↑12,872 from prior week)

• Total Traders: 108

• Contract Size: GBP 62,500

---

Positioning by Trader Type

1. Dealer Intermediaries

   • Net Short: Significant short bias (42,599 short vs. 9,361 long).

   • Change: Increased short positions by 1,977 contracts.

   • Implication: Dealers (often banks) are hedging or betting against GBP strength.

2. Asset Managers/Institutional

   • Net Short: 78,243 short vs. 64,941 long.

   • Change: Added 15,005 new short positions (bearish shift).

   • Implication: Institutional sentiment is turning negative on GBP.

3. Leveraged Funds (Hedge Funds)

   • Net Long: 63,501 long vs. 21,817 short.

   • Change: Increased longs by 1,148 and shorts by 6,984.

   • Implication: Hedge funds remain bullish but trimmed some exposure.

4. Other Reportables & Nonreportables

   • Nonreportable Positions (small traders): Net long (35,906 long vs. 26,266 short).

   • Other Reportables: Minimal activity (0 long, 4,784 short).

---

Net Positioning (Long vs. Short)

• Dealers: Strongly net short.

• Asset Managers: Moderately net short (increased bearishness).

• Leveraged Funds: Strongly net long (bullish, but less aggressive).

• Small Traders: Slightly net long (contrarian indicator if extreme).

---

Key Takeaways

• Bearish Pressure: Dealers and asset managers are increasing short exposure, signaling institutional skepticism about GBP strength.

• Bullish Hedge Funds: Leveraged funds remain net long, but their added shorts suggest caution.

• Open Interest Rise: Increased OI alongside price movement would confirm trend strength (data not shown here).

Market Implications

• Short-Term: GBP may face downward pressure if institutional shorts dominate.

• Contrarian Watch: If leveraged funds unwind longs, GBP could weaken further.

• Confirmation Needed: Pair this with price action (e.g., GBP/USD trend) for directional bias.

Actionable Insight

Monitor for:

1. Price breaking key support (aligned with rising shorts).

2. Leveraged funds reducing longs (would amplify bearish momentum).

Analysis of the US Dollar Index COT Report (June 24, 2025)

 

Key Takeaways:

1. Market Sentiment:

   • Leveraged Funds (Hedge Funds/Speculators) hold a net short position (11,113 short vs. 10,723 long), suggesting bearish sentiment toward the USD.

   • Asset Managers/Institutions are also net short (8,738 short vs. 3,421 long), reinforcing a cautious outlook.

   • Dealers (Market Makers) are heavily long (9,413 long vs. 0 short), which could indicate hedging activity or contrarian positioning.

2. Open Interest & Changes:

   • Total Open Interest: 31,225 contracts (↓$84 from prior week).

   • Leveraged Funds increased short exposure (+41,816 contracts), a strong bearish signal.

   • Asset Managers reduced longs (↓¥40) while increasing shorts (+2,464), aligning with bearish momentum.

3. Positioning Breakdown:

   • Long Dominance: Dealers (30.1%) and Leveraged Funds (34.3%) hold the largest long positions.

   • Short Dominance: Leveraged Funds (35.6%) and Asset Managers (28.0%) drive the bearish pressure.

   • Nonreportable Positions (Retail Traders?) are net short (3,554 short vs. 2,840 long), often a contrarian indicator.

Implications for the US Dollar (DXY):

• Bearish Pressure: The increase in speculative shorts suggests weakening confidence in the USD.

• Contrarian Signal: Dealers' extreme long positioning may indicate a potential reversal if shorts get squeezed.

• Watch for: Any shift in Fed policy or risk sentiment that could trigger a short-covering rally.

Conclusion:

The COT report reflects strong bearish sentiment among large traders, but extreme positioning could lead to a reversal if macroeconomic conditions shift (e.g., Fed hawkishness, safe-haven demand). Monitor price action for confirmation.

Gold COT Report (24 June 2025)

 

Gold COT Report Analysis (24 June 2025)

Key Observations:

1. Open Interest & Market Activity
• Total Open Interest: 434,958 contracts (↑ 6,236 from prior week)
• Number of Traders: 310 (indicating moderate institutional participation)
2. Positioning by Trader Category
• Swap Dealers (Market Makers & Hedgers)
• Net Short Dominance: 50.7% of open interest (229,728 contracts)
• Significant increase in shorts (+4,174 contracts).
• Longs decreased (-448), suggesting hedging pressure or bearish sentiment.
• Managed Money (Hedge Funds, CTAs)
• Bullish Bias: 37.7% long (163,829 contracts, ↑ 3,817)
• Shorts surged (+41,566), indicating profit-taking or new bearish bets.
• Still net long by a wide margin, but short-covering may be underway.
• Producers/Merchants (Commercial Hedgers)
• Net Short: 14.4% (62,734 contracts, ↑ 1,994)
• Typical hedging behavior, but long positions also rose (+11,253), possibly due to price stabilization.
• Other Reportables & Small Traders
• Other Reportables: 21.2% long (92,248 contracts), 5.1% short (22,372)
• Nonreportable (Retail/Small Traders): 12.6% long, 4.5% short – slightly bullish.
3. Net Positioning & Sentiment
• Large Speculators (Managed Money + Other Reportables): Strong net long (256,077 vs. 61,073 shorts).
• Commercials (Swap + Producers): Heavily net short (292,462 vs. 61,902 longs).
• Conflict: Big speculators remain bullish, while commercials (smart money) are heavily hedged/short.

Implications for Gold Prices:

• Short-term: Potential correction risk if Managed Money continues to reduce longs or increase shorts.
• Medium-term: If Swap Dealers unwind shorts aggressively, a bullish reversal could occur.
• Key Levels to Watch:
• Resistance: If gold breaks higher, Managed Money may add more longs.
• Support: A breakdown could trigger further selling from speculators.

Conclusion:

The COT report shows divergence between bullish speculators and bearish commercials. While the net long from funds supports gold, the heavy short positioning from Swap Dealers suggests caution. Monitor price action for a breakout or reversal signal.

Scalping the Gold

1 min chart scalping.

 

Impact Of U.S-5 Year Treasury on Forex

 

The U.S. 5-year Treasury note has a significant impact on currency trading (forex) because it influences investor sentiment, interest rate expectations, and capital flows. Here’s how:

1. Interest Rate Expectations & Yield Movements

• The 5-year Treasury yield reflects market expectations about future Federal Reserve interest rate policies.

• If yields rise, it signals higher expected interest rates, making the U.S. dollar (USD) more attractive as investors seek higher returns.

• Conversely, falling yields suggest dovish Fed policies, weakening the USD.

2. Risk Sentiment & Safe-Haven Flows

• U.S. Treasuries are considered safe-haven assets.

• In times of economic uncertainty, demand for 5-year Treasuries rises, strengthening the USD as investors flee riskier assets.

• If yields drop due to safe-haven buying, it can signal risk-off sentiment, weakening riskier currencies (e.g., AUD, EM FX).

3. Yield Spreads Between Countries

• Forex traders compare 5-year U.S. yields vs. other countries’ bonds (e.g., German Bunds, Japanese JGBs).

• A widening yield spread in favor of the U.S. boosts USD demand as investors chase higher returns.

• A narrowing spread can weaken the USD if foreign bonds become more attractive.

4. Inflation & Economic Growth Signals

• The 5-year Treasury yield reacts to inflation expectations (e.g., breakeven rates from TIPS).

• Rising yields due to inflation fears may strengthen the USD if the Fed is expected to hike rates.

• Falling yields due to recession risks can weaken the USD if rate cuts are anticipated.

5. Fed Policy & Forward Guidance

• The Fed monitors the 5-year yield curve (e.g., vs. 2-year or 10-year) for economic signals.

• An inverted yield curve (5-year below 2-year) may signal a coming recession, weakening the USD.

• A steepening curve (5-year rising faster than 10-year) suggests growth optimism, supporting the USD.

Trading Implications:

• USD Strengthens when 5-year yields rise (higher rate expectations).

• USD Weakens when 5-year yields fall (dovish Fed outlook).

• Carry trades (borrowing in low-yield currencies to buy USD assets) depend on yield differentials.

Key Data to Watch:

• 5-year Treasury auctions (strong demand = lower yields, weak demand = higher yields).

• Fed speeches & economic data (jobs, CPI) that influence rate expectations.

• Yield spreads (e.g., U.S. 5-year vs. Germany’s 5-year Bund).

Conclusion

The 5-year Treasury note is a critical driver of forex markets because it reflects interest rate expectations, risk sentiment, and economic trends. Traders closely monitor its yield movements to gauge USD strength or weakness against other currencies.

Analysis of the Dollar Index COT Report (10 June 2025)

 

Key Observations:

1. Open Interest & Total Changes

   • Open Interest: 30,659 contracts (total market participation).

   • Total Changes: 12,652 contracts (significant change in positions, likely reflecting recent market volatility or shifts in sentiment).

2. Positioning by Trader Categories:

   • Leveraged Funds (Hedge Funds/Speculators):

     • Long Positions: 19,331 contracts (63.1% of OI) — dominant bullish stance.

     • Short Positions: 6,341 contracts (20.7% of OI) — modest bearish exposure.

     • Net Position: Strongly net long (~13,000 contracts), indicating speculative confidence in USD strength.

   • Asset Managers/Institutional Investors:

     • Long Positions: 2,311 contracts (7.5% of OI).

     • Short Positions: 10,596 contracts (34.6% of OI) — heavily net short.

     • Divergence: Institutional players are betting against the USD, contrasting with leveraged funds.

   • Dealer Intermediaries (Banks/Market Makers):

     • Minimal activity (6.7% long, 0% short), suggesting neutral or hedging roles.

   • Other Reportables & Nonreportables:

     • Mixed signals but lean slightly bearish (e.g., Other Reportables: 19.2% short vs. 1.7% long).

3. Long vs. Short Summary:

   • Net Bullish: Leveraged funds’ large net long positions outweigh asset managers’ net shorts.

   • Potential Conflict: Speculators (long) vs. institutional investors (short) could lead to heightened volatility.

Implications for the USD Index:

• Bullish Bias: Speculative dominance suggests short-term USD strength, but institutional shorts warn of longer-term caution.

• Market Sentiment: Conflicting positions may reflect uncertainty over Fed policy or global macro risks.

• Watch for: A squeeze if asset managers cover shorts or leveraged funds take profits.

Actionable Insight:

Monitor follow-up COT reports to see if leveraged funds sustain longs or if institutional shorts expand, which could signal a reversal.

NASDAQ-100 E-Mini COT Report Analysis (June 10, 2025)

 

Key Highlights

1. Open Interest (OI): 276,888 contracts (▲ +146 from prior week)

   • Slight increase suggests stable market participation, no major exodus or surge.

2. Positioning by Trader Group:

   • Asset Managers/Institutions: Net Long (92,286 vs. 38,602)

     • Strong bullish bias (33.3% of OI long vs. 13.9% short).

     • Institutional confidence likely tied to tech earnings optimism or Fed policy expectations.

   • Leveraged Funds (Hedge Funds): Net Short (98,617 vs. 57,702)

     • Aggressive short exposure (35.6% of OI short vs. 20.8% long).

     • Contrarian bet against rallies or hedging portfolio risk.

   • Dealers/Intermediaries: Net Short (76,121 vs. 63,054)

     • Typical market-making activity; slight bearish tilt (27.5% short vs. 22.8% long).

   • Retail (Nonreportable Positions): Net Short (43,119 vs. 37,454)

     • Small traders lean bearish, potentially a contrarian signal (retail often fades trends).

3. Long vs. Short Breakdown:

   • Total Longs: ~265,397 (63.5% of OI) | Total Shorts: ~264,397 (63.3% of OI)

   • Near-perfect balance, but institutional longs vs. hedge fund shorts create a tug-of-war.

---

Market Implications

• Bullish Drivers:

  • Institutional dominance in longs suggests "smart money" expects upside (e.g., AI sector strength, rate cuts).

  • Low dealer long exposure reduces risk of forced selling.

• Bearish Risks:

  • Hedge fund shorts could fuel downside if momentum breaks (e.g., hot inflation data).

  • Retail bearishness is a contrarian signal but less impactful alone.

---

Actionable Insights

1. Watch for Institutional Follow-Through:

   • If Asset Managers add more longs, NASDAQ-100 could rally toward ATHs.

2. Leveraged Funds’ Short Squeeze Risk:

   • A breakout above resistance may force hedge funds to cover shorts, accelerating gains.

3. Technical Levels:

   • Pair COT data with price action (e.g., 20,000 support or 21,500 resistance).

Gold COT Report Analysis (10 June 2025)

 

Key Observations:

1. Open Interest & Market Activity

   • Open Interest: 417,143 contracts (↑ 41,202 from previous week)

   • Total Traders: 314 (indicating strong institutional participation)

   • The significant increase in open interest suggests new money flowing into gold futures, potentially signaling heightened speculative interest or hedging activity.

2. Positioning Breakdown

   • Swap Dealers (Hedgers/Institutions):

     • Net Short (212,220 vs. 38,867 long) – A dominant short position (50.9% of OI), indicating heavy hedging or bearish institutional sentiment.

     • Spread positions increased (16,184 contracts) – Suggesting some players are neutral/market-making.

   • Managed Money (Hedge Funds/Speculators):

     • Strongly Long (160,680 vs. 36,589 short) – 38.5% of OI is bullish, a sharp contrast to Swap Dealers.

     • Significant increase in long positions (↑770 contracts) – Reflects strong speculative buying interest.

   • Other Reportables (Large Traders):

     • Net Long (85,315 vs. 21,925 short) – Reinforces bullish sentiment among big traders.

     • Spread positions (14,865 contracts) – Some hedging or neutral strategies in play.

   • Nonreportable Positions (Small Traders):

     • Net Long (54,008 vs. 18,771 short) – Retail traders are also leaning bullish.

3. Long vs. Short Dominance

   • Bullish Forces: Managed Money + Other Reportables + Nonreportables = 299,003 long (71.7% of OI)

   • Bearish Forces: Swap Dealers + Product Merchants = 274,966 short (65.9% of OI)

   • Net Positioning: Slightly bullish, but Swap Dealers' heavy short exposure could act as a counterbalance.

Market Implications:

• Bullish Case: Managed Money and large traders are heavily long, suggesting strong speculative demand for gold. If macroeconomic factors (e.g., Fed rate cuts, inflation fears) support it, gold could rally.

• Bearish Risk: Swap Dealers' extreme short positions could indicate institutional hedging against a potential downturn, acting as a ceiling on prices.

• Neutral Spread Activity: The notable spread positions (Swap Dealers & Managed Money) suggest some traders are playing both sides, possibly expecting range-bound action.

Conclusion:

The COT report shows a bullish speculative bias (Managed Money, Other Reportables, and small traders are net long), but Swap Dealers' heavy short exposure introduces caution. If gold breaks higher, a short squeeze could amplify gains, but if sentiment shifts, the large speculative longs may unwind, leading to a pullback.

Watch for:

• Follow-through in price action (breakout above resistance or rejection).

• Any shift in Swap Dealers' positioning (covering shorts = bullish signal).

• Macroeconomic catalysts (Fed policy, inflation data, USD trends).

XAUUSD Soar after Israel confirmed strike on Iran

 News broke out that Israel strike on Iran. XAUUSD price soar.

 

Futures Trading vs. CFD Trading: A Comprehensive Comparison

 

Trading Venue and Regulation

• Futures: Traded on regulated exchanges (e.g., CME, ICE) with oversight by bodies like the CFTC. Standardized contracts ensure transparency and lower counterparty risk via clearinghouses.

• CFDs: Over-the-counter (OTC) products offered by brokers, leading to variable regulation. Higher counterparty risk as brokers act as the counterparty; banned in some jurisdictions (e.g., the U.S.).

Contract Structure

• Futures: Fixed expiration dates requiring roll-over or closure. Possible physical settlement (e.g., commodities) but often cash-settled.

• CFDs: No expiration; positions can be held indefinitely but incur overnight financing charges. Always cash-settled.

Costs and Fees

• Futures: Commissions, exchange fees, and potential roll-over costs. Lower spreads but higher upfront margin.

• CFDs: Costs embedded in spreads, overnight fees, and possible inactivity charges. No commissions, but wider spreads common.

Leverage and Accessibility

• Futures: Leverage determined by exchanges, often lower (e.g., 5:1 to 20:1). Higher capital requirements due to standardized contract sizes.

• CFDs: Higher leverage (up to 30:1 or more in some regions). Smaller contract sizes allow retail participation with less capital.

Market Access

• Futures: Limited to exchange-listed assets (indices, commodities, currencies).

• CFDs: Broader access, including stocks, ETFs, cryptocurrencies, and niche markets, depending on the broker.

Risk Profile

• Futures: Lower counterparty risk due to clearinghouses. Potential for physical delivery if held to expiry.

• CFDs: Counterparty risk tied to broker solvency. No delivery risk but exposure to overnight funding costs and gap risks.

   

  7. Trading Flexibility

     • Futures: Set trading hours aligned with exchanges. Short selling permitted without borrowing.

     • CFDs: Often 24/5 trading for forex and indices. Easier short selling with no borrowing requirements.

  8. Tax and Purpose

     • Futures: Favorable tax treatment in some regions (e.g., 60/40 rule in the U.S.). Used for hedging by institutions.

     • CFDs: Typically taxed as income. Primarily for speculation by retail traders.

  Pros and Cons Summary

• Futures Pros: Regulated, transparent, lower counterparty risk, tax benefits.

• Futures Cons: Higher capital, fixed expiries, less flexible for small traders.

• CFD Pros: Flexible leverage, no expiry, diverse markets, lower entry barriers.

• CFD Cons: Higher counterparty risk, overnight costs, regulatory restrictions.

Ideal Use Cases

• Futures: Suitable for institutions and traders hedging or speculating with larger capital.

• CFDs: Attractive to retail traders seeking flexibility and lower capital requirements for short-term speculation.

This comparison highlights key distinctions to guide traders in choosing the instrument aligned with their strategy, risk tolerance, and capital capacity.