Financial markets weekly overview for February 19 — 25
We make up a weekly medium-term trade list based on CFTC reports and technical analysis.
The overview provides a description of the technical condition of the market on the most popular financial instruments, as well as information on the large speculators’ actions according to the last COT reports and the previous period.
If you want to use CFTC reports in your trading practice, you should understand that for an objective assessment of the situation it’s not enough to know the data of the last report. The dynamic is more important, in other words, comparing the statistics of large speculators’ actions in the current period with the previous one, so we mention both values.
Trade list in a graphical format is available here.
If you want to get more information on the pullback trading tactics and other aspects of trading in the market, watch the «Horizontal levels in trading» video course.
E-Mini S&P500 (ESH18)
The market remains in the medium-term bear trend and the correction develops. A pullback selling opportunity will appear after the correction completion on the Daily timeframe. Short positions will remain relevant until the price is below the resistance level, the highs of January 26.
COT indicator decreased but didn’t reverse. CFTC reports indicate that large speculators go on buying and the professionals’ opinion doesn’t correspond to the technical picture and it makes sense to reduce the position size when an entry point appears in the trend direction.
Dollar Index (DXY)
The American dollar remains in the medium-term bear trend and the impulse wave develops. A pullback selling opportunity will appear after the correction formation on the Daily timeframe. Short positions will remain relevant until the market is below the nearest resistance level on the Daily timeframe, the highs of February 8 – 12.
CFTC reports indicate that large speculators go on buying the dollar, hedgers are selling and the professionals’ opinion doesn’t correspond to the Daily trend direction and it makes sense to reduce the position size when an entry point appears in the trend direction.
Euro (EURUSD)
Euro remains in the bear trend. The correction came to an end last week and the pullback selling opportunity was formed. Short positions will remain relevant until the market is below the nearest resistance level on the Daily timeframe, the highs of February 15 – 16.
COT indicator decreases, large speculators are selling Euro and the professionals’ opinion corresponds to the market technical picture.
Swiss Franc (USDCHF)
USDCHF currency pair remains in the medium-term bear trend and the impulse wave develops. A pullback selling opportunity will appear after the correction formation on the Daily timeframe. USDCHF short positions will remain relevant until the market is below the nearest resistance level on the Daily timeframe, the highs of February 7 – 8.
COT indicator increases, large speculators go on buying franc and the professionals’ opinion corresponds to the Daily trend direction.
British Pound (GBPUSD)
British pound remains in the bear trend. The correction came to an end last week and the pullback selling opportunity was formed. Short positions will remain relevant until the market is below the nearest resistance level on the Daily timeframe, the highs of February 1 – 2.
COT indicator decreases. CFTC reports indicate that large speculators go on selling Pound and hedgers are buying and the professionals’ opinion corresponds to the Daily trend direction.
Japanese Yen (USDJPY)
USDJPY currency pair remains in the bear trend on the Daily timeframe and the impulse wave develops. A pullback selling opportunity will appear after the correction formation on the Daily timeframe. USDJPY short positions will remain relevant until the market is below the resistance level, the highs of February 2 – 5.
COT indicator reversed, large speculators began to sell Yen and the professionals’ opinion no longer corresponds to the Daily trend direction and it makes sense to reduce the position size when an entry point appears in the trend direction.
WTI Crude Oil (CLJ18)
The oil market remains in the medium-term bear trend and the correction wave develops. A pullback selling opportunity will appear after the correction completion on the Daily timeframe. Short positions will remain relevant until the market is below the nearest resistance level on the Daily timeframe, the highs of February 1 – 2.
COT net position indicator reversed. Large speculators began to sell oil. Professionals’ opinion corresponds to the Daily trend direction.
Canadian Dollar (USDCAD)
USDCAD medium-term trend remains upward. The correction came to an end last week and the pullback buying opportunity was formed. Long positions will remain relevant until the market is above the nearest support level on the Daily timeframe, the lows of February 15 – 16.
COT indicator reversed. CFTC reports indicate that large speculators began to sell the Canadian dollar and hedgers are buying and the professionals’ opinion corresponds to the market technical picture.
Gold (XAUUSD)
The resistance level was broken on the Daily timeframe on Thursday, the trend is bullish now. A pullback buying opportunity will appear after the correction formation on the Daily timeframe. Long positions will remain relevant until the market is above the nearest support level on the Daily timeframe, the lows of February 8 – 12.
COT indicator decreases, large speculators go on selling gold and the professionals’ opinion doesn’t correspond to the technical picture and it makes sense to reduce the position size when an entry point appears in the trend direction.
Silver (XAGUSD)
The silver market remains in the medium-term bear trend. The correction came to an end last week and the pullback selling opportunity was formed. Short positions will remain relevant until the price is below the resistance level, the highs of February 15 – 16.
At the same time CFTC reports indicate that large speculators go on selling and hedgers are buying. Professionals’ opinion corresponds to the technical picture.
Australian Dollar (AUDUSD)
The Australian dollar remains in the bear trend. The correction came to an end last week and the pullback selling opportunity was formed. Short positions will remain relevant until the price is below the resistance level, the highs of February 15 – 16.
COT net position indicator reversed. Large speculators began to sell, hedgers are buying. Professionals’ opinion corresponds to the Daily trend direction now.
New Zealand Dollar (NZDUSD)
The resistance level was broken on the Daily timeframe on Wednesday, the trend is bullish now. A pullback buying opportunity will appear after the correction formation on the Daily timeframe. Long positions will remain relevant until the market is above the support level, the lows of February 8 – 9.
COT indicator reversed. CFTC reports indicate that large speculators began to sell and the professionals’ opinion doesn’t correspond to the technical picture now and it makes sense to reduce the position size when an entry point appears in the trend direction.
Russian rouble (USDRUB)
USDRUB currency pair remains in the medium-term uptrend and the correction develops on the Daily timeframe. USDRUB long positions will remain relevant until the market is above the support level, the lows of February 1 – 2.
COT indicator decreases along with the market and large speculators go on selling rouble and the professionals’ opinion corresponds to the Daily trend direction.
Conclusions
In terms of medium-term trading, financial instruments with the correction close to completion on the Daily timeframe and with potentially the most promising risk-reward ratio are GBPUSD, EURUSD, USDRUB.
In the near future USDCHF, NZDUSD can become noteworthy depending on the market correction depth.
Other financial instruments in the trade list may be also interesting, but in these markets pullback signals on the Daily timeframe are likely to occur no earlier than a week.
More information on the topic:
- The role of support and resistance levels in the trading plan
- Trading tactics. Breakout trading and pullback trading
- How to use CFTC reports in trading. General concepts
- How to use CFTC reports in trading. The logic of large speculators
Good luck in trading!
