Alan Solarsh walks through reading COTS data for gold, showing where to find weekly reports and what the numbers mean. Institutions are adding short bets while staying net long, a signal he uses alongside his 8-EMA trading strategy rather than relying on fundamentals alone.
Questions this video answers
October 17, 2023.
Friday, 10 October (year implied 2023).
Every Friday at GMT+2, 7:00 PM (South Africa time).
8,074 long positions sold/reduced.
Increased shorts by 11,719 positions.
Chapters
This video tutorial gives you a basic understanding of the COTS data. So the COTS data is an audited report of the commitment of traders and it tells you exactly what's happening in the market. So we're trading gold, so we're just going to scroll down to gold and I'm going to take a screenshot of gold and I'm going to remove a lot of the data. Now this data comes out every Friday at GMT + GMT + two 7 o' clock in the evening in South Africa. So you can watch out for it. Now to understand what this information is, we're just going to enlarge it so that you can better understand it. Okay, so last week it came out on the 10th of October and it tells you what happened from the previous week to that date. 10 October, Friday, 10 October. Okay, so over here you can see that these are the long positions that the institutions are holding and these are the short positions that the institutions are holding. So this gives you an idea, okay, of what the sentiment is long term of the institutions. All right, so you can see from the previous week to the next week.
The institutions sold or got rid of 8,074 long positions. All right, and what are they holding short? They're holding, they were holding 137,000 positions and then they increased their positions short by 11,719 and that gives them a net short position of 148,899. So as you can see here, they're definitely increasing their short positions but they are net long. So their long term view at the moment is long but they starting to add to their, to to their shorts. So what can we see regarding the market? So what we can see is at the moment we are net long. All right, that's what we can see. Currently we're net long but the banks are definitely adding to their short position. So possibly there is going to be a short move coming shortly. Now the way I see the market we're currently long second candles open above the 8 exponential moving average. But you know the banks control institutions control the market and we just need to wait and see what the market does. So just this just gives you an outlook of what the banks are doing on a long term basis rather than a short term basis. So I found this data it to be late, it is in history, it's past tense but it does give you a, an outlook of what the banks are doing long term and what their intentions are. So currently you can see that their Intention is, is to increase their short position. So as you can see it's been increasing from 96 to 119, 137, 148. So week by week they're increasing their short position. So what are they doing? Are they dollar cost averaging? So let's have a look and see what the banks are doing. Let's draw it out for us. Okay, so they're placing, they've been placing short positions. So let's just draw a yellow line for the short positions. Let's just get a yellow line over here going and you can see that maybe they were placing short positions there. They place short positions there, they're placing short positions there and they're carrying on placing short positions. So we'll, it will be interesting to see what happens this Friday. I'm not going to make a video and a continuation to this video but you can go look at this at the data after the fact. So just scroll up to the next date which, which will be this Friday the 20th is when the next report comes out. All right. And so you can go and check that data and see exactly what happened during that date after this video was created. Alright so let's try and understand what the banks are doing. Alright so let's say the bank moves the price short. So remember it's dollar cost averaging. So let's say they take a sell position and they sell and the price goes all the way down here. Now just remember that there is that big gap over here. So that gap needs to be closed that they created the day of the, the Middle east war that started in October. Okay so let's say the price comes down to here, all right, this position is in a loss. These positions because they were shorts are now in a, in a profit. So what the bank could do, okay is they could close all these short positions, okay, in a profit, close this position in a loss. But overall they've made a profit. That's what dollar cost averaging means. On an average they've made a profit. So the bank could do that and then of course they could push the price further north. Nobody knows what the bank is going to do or what the institutions are going to do. We've just got the COTS data to give us an estimate of what the, what the banks are doing currently and what they have been doing in the last week, weeks and months previously. So currently the banks are net long but they are increasing their short positions. So it'll be interesting to see how this plays out. Not sure why they've done this, this could be because they're almost 100 aged as you, as you can see. It could be because of the Middle Eastern war, could be because of the conflict that's happening in pending conflict that's between China and Taiwan. And I don't know, the fact that America has sent their two biggest warships to the Middle East, I think we can expect a, a lot more conflict to come. I think that Iran could get involved. If Iran gets involved, then America will get involved, Jordan will get involved, Egypt will get involved, then Russia has to get involved and China has to get involved. So very interesting times that we're living in and we just need to know exactly what's going on. So I don't like to use the, this data as trading decisions. I prefer to trade solely on my 8 exponential moving average strategy. It's worked for me over the last eight years and it gives me a better understanding. I'm a, I'm a hundred percent a technical trader. I'm not really watching the news and I'm not, my head is not buried in the news and I'm not all doom and gloom with regards to what's happening all over the world. I'm aware of it, but I mainly focus on my technical analysis and I make trading decisions based on my technical analysis. So I hope now that you understand what this report is, why Guy talks about it, and why a lot of the fundamental traders out there. So Guy says that it's a combination of both. He uses a combination of both. He uses a combination of, of the fundamentals together with the technicals to make trading decisions. I make trading decisions solely on technical analysis. How you do it is up to you. So I hope that you found this video interesting and I'll see you on my next video.
