BLUE LINE = BRLUSD
The week covered by the COT began very promising for the bulls. The market rallied for two days, around 15c, and met resistance in the 155.00 general area, possibly due to the upcoming options expiration and long liquidation. Selling weighed on the market, stops were hit and funds very likely reversed to selling as suggested by the COT report. The major players, commercials and managed money, have minimal changes indicating two way activity in KC. In RC, the changes are greater as commercials and swap dealers sold heavily to funds. In both markets, fund activity continued to be new buying. The days after showed continued weakness as funds seem to have turned consistent sellers and were likely joined by other sectors.
The market ended near the lows of the 8 day period that the COT covered plus the days after. As it dropped, commercials bought. At the lower end of the range, forward buying was observed that is possibly linked to the consumer sector. Bids are present on the way down.
The reversal by funds is a result of programmed selling triggered by changing prices and momentum. In the last few days, June option expiration may have been an additional factor to the pressure. Although coffee exports have been reported to be lower in several producing countries, the consumer end may be improving as mask mandates have been lifted by the CDC in the US. Many cities are going back to normal, cautiously. The presence of forward buying has put some pressure on spreads. Although the front spreads, NU and UZ have not changed much, the more forward spreads are showing some weakness.
From a COT and market behavior point of view, the market has moments of strength but is checked by the constant fund selling. It will need other sectors to step in and push prices higher to reverse funds back to buyers. For now the selling continues into the bids of commercials.
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