a poem about sleep
Blue Line = BRLUSD
The market was weak from the very beginning of the period as funds continued to sell longs but mostly because they added new sales. Prices were pushed down to 102.35 and the market spent a great deal of time above the 103.00 level. Commercials supported the market by buying delta but there was forward buying as well, likely consumer. On the last day of the COT, prices spiked close to the high of 106.65 due to random buying and possibly with the help of Robusta managed money who covered shorts. Longs took advantage of the strength as all sectors in both markets, and including long funds, sold to push prices back down to the familiar 103.00 area.
The remainder of the week, it appears that fund selling continued but the market could not break 102.00. Prices rose possibly in sympathy to the strong Real, or weak $, or possibly due to the continued dryness in southern Brazil. Nevertheless, with the strength there was intense selling. It is unlikely that funds have reversed and are probably close to a zero net position in KC after this week’s activity. They’re trigger to reverse may not be too far off if they have not yet reversed.
The COT report on its own is bullish in relation to price action. Commercial buying prevented prices to break the 102.00 level. Buying continues to be present by other sectors as well, especially by RC funds. Still, any strength seems to be met with selling. The Dec OI dropped while the total OI rose as some rolling took place. On Friday, a combination of events took place with regard to spreads. They rose in value with the steady outright market. At the end of the day, values weakened in the front months but steadied in the forward as outright selling took place in ‘22 months, possibly by origin.
Option expiration will take place on Friday while the rolling of Dec occurs at the same time. Outright prices however may not be very volatile. On Friday, total volume was 69,878 lots, 54,041 lots of which were spreads, 77%. In addition, we will find support and resistance around the striking prices as usual.
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