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Cocoa: On March 18, May cocoa generated an intermediate term buy signal after generating a short-term buy signal on February 25. We have no recommendation.

WTI crude oil:

May WTI crude oil lost 52 cents on heavy volume of 1,369,524 contracts. Volume was the strongest since March 10 when WTI lost 45  cents on volume of 1,394,769 contracts and total open interest declined by 17,469. On March 18, total open interest declined by 48,358 contracts, which relative to volume is approximately 25% above average meaning liquidation was substantial on Friday’s decline.

The COT report revealed that managed money substantially increase their net long position and our calculation showed that managed money was long as of the tabulation date of March 15 by a ratio of 2.90:1, which is up from the previous week of 2.36:1 and a substantial increase from two weeks ago of 1.80:1.

As this report is being compiled on March 21, the May contract is trading 25 cents above Friday’s close and has made a daily high of 41.80, which is below Friday’s high for the move of 42.49 and a daily low of 40.41, which is the lowest print since 40.00 made on March 17. May WTI remains on short and intermediate term buy signals.  We have no recommendation.

Gold:

April gold lost $10.70 on volume of 188,814 contracts. Total open interest declined by 4,950, which relative to volume is average. The April contract, which is approaching first notice day lost 14,737 of open interest. As this report is being compiled on March 21, the April contract is trading 8.40 lower and has made a daily low of 1241.20, which is below Friday’s print of 1248.40 and is the lowest print since 1227.00 made on March 16. Gold is trading in a consolidation pattern, and the only question is whether it will generate a short term sell signal.

According to the latest COT report, which was released on Friday, managed money liquidated 1,115 of their long positions and also liquidated 3,465 of their short positions. As a consequence, managed money is now long gold by a ratio of 5.41:1, which is up from the previous week of 4.87:1 and the ratio two weeks ago of 4.54:1. In summary, there are large numbers of speculative longs who can add selling pressure to gold if the market continues to drift lower. From a seasonal point of view, the March through June period indicates a weak performance for both gold and silver. We have no recommendation.

Euro:

The June euro lost 51 pips on volume of 153,941 contracts. Total open interest declined by 2,743 contracts, which relative to volume is approximately 25% below average, but a total open interest decline on Friday’s loss is positive. As this report is being compiled on March 21, the June contract is trading 24 pips lower and has made a daily low of 1.1264, which is below Friday’s print of 1.1284, but above the March 17 low of 1.1233. The euro is on short and intermediate term buy signals, and we think it should be traded from the long side. It appears that the 50-100-150-200 day moving averages are moving into a bullish set up. We have no recommendation.

British pound:

The June British pound lost 3 pips on light volume of 64,979 contracts. Total open interest increased by 668 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on March 21, the June contract is trading 1.02 cents lower and has made a daily high of 1.4472, which is below Friday’s high for the move of 1.4519.

The COT report released on Friday showed that leverage funds remain short by ratio of 1.33:1, which is down sharply from the previous week of 2.89:1 and the ratio two weeks ago of 2.40:1. The report showed that leverage funds added 38,693 to their long positions and liquidated 10,117 of their short positions. We want to see more liquidation of short positions between now and the end of March, which will serve to relieve upward pressure on the pound.

We are interested in the bearish side of the pound and since generating a short-term buy signal on March 14, the market has traded sideways to higher. March tends to be a strong month for the pound and April to a lesser degree. We prefer to give the pound more time to trade before making a bearish recommendation. We think the June contract pound will retest the February 29 low of 1.3835 and possibly break below it as concern about Brexit grows.

Australian dollar:

The June Australian dollar lost 51 pips on volume of 70,455 contracts. Total open interest increased by 1,267 contracts, which relative to volume is approximately 25% below average and the total open interest increase on Friday’s decline is negative. On Friday, the June contract made a new high for the move of 76.51, which is the highest print since 77.08 made the week of June 29, 2015.

The latest COT report showed that leverage funds continue to increase their net long position and liquidated 3,104 their long positions, and also liquidated a sizable 9,155 of their short positions, which brought the ratio of longs to shorts to 2.12:1, which is up substantially from the previous week of 1.41:1 and a complete reversal from two weeks ago when leverage funds were short by ratio of 1.11:1.

The Australian dollar is in a bullish moving average set up with the cash Australian dollar trading at a 50 day moving average of 71.88, 100 day average of 71.86 and the 150 day moving average of 71.61. The 200 day moving average remains at 72.59. If the currency trades around current levels for the next couple of weeks, the 50 day moving average will cross above the 200 day moving average. Our recommendation is to avoid the short side of the Australian dollar.

Canadian dollar:

The June Canadian dollar lost 22 pips on light volume of 58,698 contracts. Total open interest increased by a massive 3,748 contracts, which relative to volume is approximately 160% above average meaning aggressive short-sellers were entering the market and driving prices slightly lower. On Friday, the June contract made a new high for the move of 77.38, which is the highest print since 77.47 made the week of October 19, 2015. Unlike the Australian dollar, the Canadian dollar is NOT in a bullish moving average set up, and we believe there will be a terrific opportunity on the bearish side of the currency once we have received signals the rally is over. For now, stand aside.