August 2008
Intermediate to advanced
208 pages
6h 50m
English
book
Sentiment in the Forex Market: Indicators and Strategies to Profit from Crowd Behavior and Market Extremes
by Jamie Saettele
Content preview from Sentiment in the Forex Market: Indicators and Strategies to Profit from Crowd Behavior and Market Extremes
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P1:a/b P2:c/d QC:e/f T1:g
c05 JWBK195-Saettele May 31, 2008 11:54 Printer: Yet to come
Sentiment Indicators 93
FIGURE 5.15 Some major turns in the GBPUSD were signaled by the three COT
indicators lining up at either 0 or 100
Source: Chart created on TradeStation
R
, the flagship product of TradeStation Tech-
nologies, Inc.
The result is a short-term top in open interest every three months, usually
during the second or third week of the contract month.
The tendency for open interest to run in three-month cycles makes it
difficult to extract meaningful information, at least during the middle of
the trend. However, major tops and bottoms do tend to occur when open
interest is its highest within a specific period. In this sense, open interest is
valuable at the same time as the Composite COT.
OTHER SENTIMENT INDICATORS
As mentioned previously, indicators derived from the COT data are the
most useful in my opinion, but there are other options out there. This is a
brief overview of the various sentiment and/or positioning indicators that I
am aware of.
P1:a/b P2:c/d QC:e/f T1:g
c05 JWBK195-Saettele May 31, 2008 11:54 Printer: Yet to come
94 SENTIMENT IN THE FOREX MARKET
FIGURE 5.16 Some major turns in the AUDUSD were signaled by the three COT
indicators lining up at either 0 or 100
Source: Chart created on TradeStation ...
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