foreigner said:
Now Ive gotten over the initial euphoria of your trade hopi, Im afraid delirium is setting in..
Can I raise some doubts?
1. Bullish Divergence in 5 Year yields
2. Bullish COT Data based on historic moves
3. COT not confirmed by OI (see above)
When using divergence in yields and COT data (to try to pick a bottom
), I like to use the 30 year yields.
When you see divergence between them AND COT is at an extreme AND seasonal says you should see a bottom/top, that's a good indication that you're actually reaching the top/bottom.
The 5 year yield I tend to use for shorter term fluctuations, think 1 to 2 weeks.
2 weeks ago there was a divergence between the US and UK on the 5 year so I suspected GU would go up (for a few days/weeks).
Although you could see divergence on the 5 (us did not make lower low, UK did), it was not visible on the 30 year, so it was a suspect rally.
When looking at the COT data, we can see that we still not made an (1 year in this case) extreme yet (close, but not there yet) AND large spec added to there shorts last week ( commercials added to there long position).
Because more shorts were added AND there was divergence on the 5Year (UK did not make higher high) AND 30 year said it was a false rally, that's why I went short, using the 4H order block, hidden OTE (1.6450 level) and turtle soup stop raid.
The COT data is released on Friday night (for me), that's why Monday is also study time and no trading time for me (most of the time
).
Monday is an excellent day to study the COT data and yields and identify the fake move there's setting up for the remainder of the week (power of 3 concept).
As for open interest, I just started reading Larry Williams "trade stocks and commodities with the insiders - secrets of the COT report" so although it is very important, I'm not the person to give you exact info on that yet.
But what I understand is that it is really useful inside a consolidation.