Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

What you can learn from Natural Gas COT Data?

1 min read

COT refers to Commitment of Traders. The Commitments of Traders (CoT) is a weekly report released by the Commodity Futures Trading Commission (CFTC). The CoT report outlines how different types of traders are positioned in the futures markets. COT reports are delayed reports(release on every friday) about the participant wise open interest data and provide a breakdown of each Tuesday’s open interest for markets.

The COT report explains the net open interest position of different market participants like Commercials (Producers, Users, Swap Dealers) and Non Commercials (mostly institutional traders) and Small speculators. From the open interest data your could figure out that small speculators are the minority players and their contribution is relatively small compared to the big players like Producers & users, Money Managers(Institutions).

Natural Gas COT

Natural Gas Historical COT data

From the historical Natural GAS COT data one can understand that the money managers maintain record shorts in Natural Gas and the Products/Users are taking bullish bets. And this behavior is quite long term since more than a year money managers maintain bearish bets and the producers/users maintain bullish bets. Generally Products/Users and Money Managers trade against each other.

Natural Gas
[Image Credit : Freecotdata ]

Common Sense says that the money managers cannot maintain their net short open interest for a prolong time. Covering their trading position will eventually ends up with short covering in Natural Gas Contracts. This week Natural gas had made a bullish engulfing pattern on the weekly charts (charts shown below). In classical technical analysis bullish engulfing pattern is a quite bullish sentiment and has a high probability of Natural Gas bottoming out.

Natural Gas Weekly Charts

Natural Gas Weekly Charts

Whats your take on Natural Gas? Do you think the prolong downtrend in Natural Gas Came to the end?

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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