INDICATOR EXPLANATION
The main data from the COT report is plotted using 4 lines. These are
The solid red line shows the commercial short (hedge) positions
The solid green line shows the commercial long positions
The dotted red line shows the non commercial short (not hedging) positions
The dotted green line shows the non commercial long positions
The shaded areas show the long and short situation in the bitcoin market as weak and strong
The lighter the color, the weaker the market is. So for example for Jan 2018 the first full month with the new futures we see a light red color between the commercial (solid green) and the noncommercial (dotted green) positioning line. This means that the market is weakening but on a longer timeframe still on an upward move. So this is a possible launchzone for any short trade but it is weak
The darker the color, the stronger the market. So for example in the middle of Feb 2018 we see a bigger area with different shades of green. There is a light green color shown between the commercial long (solid green) and the non commercial long (dotted green) line and a darker green color between the commercial long (solid green) and the commercial short (solid red) line. So this is a possible and strong launchzone for a long trade in bitcoin
HOW TO USE
Whenever Bitsense shows a light shaded colored area, that area then can be used as a launchzone for trades in the direction of the market but one needs to know that the light colors represent weak market conditions. So a light shaded red area represents a possible launchzone for a short trade but it is a very weak short market (no matter how many points the market moves in that direction it is still a weak condition)
Whenever Bitsense shows a darker shaded colored area, that area then can be used as a launchzone for trades in the direction of the market. The same goes for areas where light and darker shaded areas are together. These represent strong market conditions
As can be seen (mid feb 2018), even though the commercial shorts stay on top, Bitsense shows a strong long situation and the market starts rising. The COT report is different from traditional indicators and Bitsense shows this clearly. To explain, both of the dotted lines show the non commercial positions either long or short. These positions are traded in the direction of their color, so if the non commercial dotted green line stays on top of the non commercial red dotted line there are more long positions on bitcoin futures out there than there are short positions. But this is not that easy with the commercial positions. These are usually hedging positions which means a high commercial solid red line represents the commercial traders hedging a market that they think i a) high and b) can rise more, so they sell short positions to lock in gains from the market position, whereas solid green line commercial positions start rising only when markets are low because these traders usually lock in cheap market prices with buying long positions
Since there is just a very short accumulation of data since the inception of both bitcoin futures the indicator still might not work correctly and you have to be very careful in using it. It is published here as an information tool only and should not be used for any real trading without other means of information about the market
By using this indicator you acknowledge that you have read and understood that this is for research purposes only and I am not responsible for any financial losses you may incur by using this indicator. All trading involves high risk and past performance is not necessarily an indication of future results
The main data from the COT report is plotted using 4 lines. These are
The solid red line shows the commercial short (hedge) positions
The solid green line shows the commercial long positions
The dotted red line shows the non commercial short (not hedging) positions
The dotted green line shows the non commercial long positions
The shaded areas show the long and short situation in the bitcoin market as weak and strong
The lighter the color, the weaker the market is. So for example for Jan 2018 the first full month with the new futures we see a light red color between the commercial (solid green) and the noncommercial (dotted green) positioning line. This means that the market is weakening but on a longer timeframe still on an upward move. So this is a possible launchzone for any short trade but it is weak
The darker the color, the stronger the market. So for example in the middle of Feb 2018 we see a bigger area with different shades of green. There is a light green color shown between the commercial long (solid green) and the non commercial long (dotted green) line and a darker green color between the commercial long (solid green) and the commercial short (solid red) line. So this is a possible and strong launchzone for a long trade in bitcoin
HOW TO USE
Whenever Bitsense shows a light shaded colored area, that area then can be used as a launchzone for trades in the direction of the market but one needs to know that the light colors represent weak market conditions. So a light shaded red area represents a possible launchzone for a short trade but it is a very weak short market (no matter how many points the market moves in that direction it is still a weak condition)
Whenever Bitsense shows a darker shaded colored area, that area then can be used as a launchzone for trades in the direction of the market. The same goes for areas where light and darker shaded areas are together. These represent strong market conditions
As can be seen (mid feb 2018), even though the commercial shorts stay on top, Bitsense shows a strong long situation and the market starts rising. The COT report is different from traditional indicators and Bitsense shows this clearly. To explain, both of the dotted lines show the non commercial positions either long or short. These positions are traded in the direction of their color, so if the non commercial dotted green line stays on top of the non commercial red dotted line there are more long positions on bitcoin futures out there than there are short positions. But this is not that easy with the commercial positions. These are usually hedging positions which means a high commercial solid red line represents the commercial traders hedging a market that they think i a) high and b) can rise more, so they sell short positions to lock in gains from the market position, whereas solid green line commercial positions start rising only when markets are low because these traders usually lock in cheap market prices with buying long positions
Since there is just a very short accumulation of data since the inception of both bitcoin futures the indicator still might not work correctly and you have to be very careful in using it. It is published here as an information tool only and should not be used for any real trading without other means of information about the market
By using this indicator you acknowledge that you have read and understood that this is for research purposes only and I am not responsible for any financial losses you may incur by using this indicator. All trading involves high risk and past performance is not necessarily an indication of future results