BLUE LINE = BRLUSD
The market began unchanged from the previous COT period and at an elevated level. It was then quickly overwhelmed by assumingly commercial selling which pushed prices down 15.95c from the highs as stops were hit and momentum funds reversed. The 220.00 general area proved to be a good support level as commercials bought. The sellers were mostly funds, including index, in both KC and RC, that liquidated longs as we see in both the OI changes and in the COT report. Worth noting however is the increase in Delta longs in the supplemental by approximately 10k lots.
Prices recovered by the end of the report period but again competitive selling pushed prices lower during the days following the report, to end the week in a weak tone. Funds are obvious sellers and will resume on Monday as such. The 220.00 support level will likely be tested again but this time Nagual’s support level may prove to be more accurate.
The Achilles Heel of this market has always been the buildup of speculative longs as they pushed prices higher, while commercials, who are the more affected by fundamental issues, sold. Nevertheless, the market finds support and steadiness. We now look for the consumer sector to show itself in the forward months. It appears that origin is still active in the forwards.
Spreads remained relatively steady during weakness, except for KN, as certified stocks climb. K, of course, is the primary target of the selling that we see.
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