AUD/USD Ready for a Short Squeeze? COT Divergence Signals
1. Retail Sentiment
73% of retail traders are short versus 27% long. Such an unbalanced positioning usually suggests short squeeze potential, as the market often moves against retail flows, especially when technical levels confirm the bias.
2. COT Report
USD Index: Non-Commercials remain skewed to the short side (+18.6k short vs. +13.6k long), with a slight reduction. This indicates the dollar is losing part of its net strength.
AUD Futures: Non-Commercials are heavily short (112k vs. 29k long), adding –16,930 new shorts. However, Commercials (hedgers) increased their longs (+11,908). Historically, commercials are more accurate at market turning points. This divergence may point to a bottom forming in AUD.
3. Seasonality (September)
September has historically been neutral to slightly negative for AUD/USD: flat performance over 20 years, and weaker over the last 5 years. However, mid-to-late September seasonality stabilizes, setting the stage for an October recovery. Bearish pressure may start fading, leaving room for upside.
4. Technical Outlook
Demand Zone: 0.6450–0.6500 has repeatedly rejected price, confirming strong support.
Supply Zone: 0.6650–0.6700, recently tested, represents the first upside target.
Structure: Price is printing higher lows and showing signs of a potential bullish structure shift. RSI is neutral, with no overbought signals.
Possible Scenario: A short pullback into 0.6520–0.6540 before accelerating toward 0.6680–0.6700.
5. Trading Summary
Bias: Moderately bullish in the short-to-medium term.
Key Drivers:
Extreme retail short positioning → potential squeeze.
COT divergence (specs heavily short, commercials long) → possible bottom.
Weak but improving seasonality.
Technical structure favoring upside continuation.
👉 Bottom line: AUD/USD favors long setups, but heavy Non-Commercial short exposure implies volatility could remain elevated.
73% of retail traders are short versus 27% long. Such an unbalanced positioning usually suggests short squeeze potential, as the market often moves against retail flows, especially when technical levels confirm the bias.
2. COT Report
USD Index: Non-Commercials remain skewed to the short side (+18.6k short vs. +13.6k long), with a slight reduction. This indicates the dollar is losing part of its net strength.
AUD Futures: Non-Commercials are heavily short (112k vs. 29k long), adding –16,930 new shorts. However, Commercials (hedgers) increased their longs (+11,908). Historically, commercials are more accurate at market turning points. This divergence may point to a bottom forming in AUD.
3. Seasonality (September)
September has historically been neutral to slightly negative for AUD/USD: flat performance over 20 years, and weaker over the last 5 years. However, mid-to-late September seasonality stabilizes, setting the stage for an October recovery. Bearish pressure may start fading, leaving room for upside.
4. Technical Outlook
Demand Zone: 0.6450–0.6500 has repeatedly rejected price, confirming strong support.
Supply Zone: 0.6650–0.6700, recently tested, represents the first upside target.
Structure: Price is printing higher lows and showing signs of a potential bullish structure shift. RSI is neutral, with no overbought signals.
Possible Scenario: A short pullback into 0.6520–0.6540 before accelerating toward 0.6680–0.6700.
5. Trading Summary
Bias: Moderately bullish in the short-to-medium term.
Key Drivers:
Extreme retail short positioning → potential squeeze.
COT divergence (specs heavily short, commercials long) → possible bottom.
Weak but improving seasonality.
Technical structure favoring upside continuation.
👉 Bottom line: AUD/USD favors long setups, but heavy Non-Commercial short exposure implies volatility could remain elevated.
Ordine annullato
Missed the bearish scenario. Structure is only bullish, waiting for the big retest at the level 67,50-67,90 inside the weekly FVG.
📈 Nicola | EdgeTradingJourney
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Declinazione di responsabilità
Le informazioni e le pubblicazioni non sono intese come, e non costituiscono, consulenza o raccomandazioni finanziarie, di investimento, di trading o di altro tipo fornite o approvate da TradingView. Per ulteriori informazioni, consultare i Termini di utilizzo.
📈 Nicola | EdgeTradingJourney
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Declinazione di responsabilità
Le informazioni e le pubblicazioni non sono intese come, e non costituiscono, consulenza o raccomandazioni finanziarie, di investimento, di trading o di altro tipo fornite o approvate da TradingView. Per ulteriori informazioni, consultare i Termini di utilizzo.