Big Dogs being net short on the Pound…
Referencing the pound today, COT sees the Big Dogs as being net short this currency. Well before the London open, the 1 hour MACD was signaling bearishness (it being below its trigger line, and heading down towards the waterline), and the 15 minute chart was showing signs of a downtrend continuation pattern in the works. And, of course, that pattern case to fruition after the London open.
One of the things to look for when you suspect that a downtrend continuation pattern might take place is to watch the behavior of MACD on the 15 minute chart. There, you will see it neutralize back up to the waterline - in this case - all the while price slithers sideways in a price equilibrium (or consolidation) pattern.
Once MACD has neutralized at the waterline, this then sets the stage for further price weakness, and MACD heads south accordingly.
We have a module in the library at ForexMentor.com that addresses the various price patterns you will encounter when you are trading the forex. See you there - and at the top and at the bank! Ka-ching!
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