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COT reports + SMT. How to determine the long-term trend (BIAS).

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A pattern in the COT reporting curve to determine long-term trend or bias (BIAS). With a scope from several weeks to months. Of course, reports arrive with a delay, but on a long-term scale this is not a big problem.

Many people use divergences, or SMT in the teachings of Smartmoney Michael Huddleston (ICT), when analyzing charts. Why not use COT and divergence reports together as a useful chart analysis tool.
Everyone probably noticed that the positions of Commercial traders in the curve constructed from reports coincides with the price movement (there is some direct correlation, and a large one). After a long observation and playing with the scale, obvious discrepancies in correlations and emerging divergences (SMT) caught my eye. And very often at the peaks of movements, followed by a reversal.

Data reports are of course released once a week. Therefore, tracking such SMTs can be used as an additional factor to determine bias in the analysis of higher time frames. And already having a bias for the next few weeks, or even a couple of months. You can look for signals in trades with confirmation on lower timeframes.

I like these divergences, they are built on an indicator that is completely independent of price. unlike any RSI, Stochastics, etc.
The curve is constructed solely based on trading volumes on the CME exchange, and does not depend in any way on the price, therefore it does not follow the price further to infinity. This is a direct correlation of two different data streams, and their divergence (divergence).
I think I’ll make a separate short article about “data streams”, what I mean by this.

And finally, of course, the tool is not the holy grail. But with a proper and adequate approach in skillful hands, it is a very good tool that can be kept in mind during a complex analysis of charts. At a minimum, if divergence occurs, you can be wary and reconsider your plans.

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註釋

Another example on the GBPUSD pair. Perhaps this pattern will not be observed on all instruments. But no one has canceled the correlation. We assume the movement of one, we can also assume on the correlating one :)