USD/CAD Speculative Longs Pile In, Forecasting A Break Of Support

[DailyFx]

EUR/USD - Speculative Positioning Signals Possible Reversal to 1.36
USD/JPY - Yen Could Fall Further Against the Greenback
GBP/USD - Sentiment Index Calls for More Sterling Losses
USD/CHF - Positions Outstanding Fall By Nearly 11 pct
USD/CAD - 85% of Traders Are Long

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How to Interpret the SSI? The FXCM SSI is based on proprietary customer flow information and is designed to recognize price trend breaks and reversals in the four most popularly traded currency pairs. The absolute number of the ratio itself represents the amount by which longs exceed shorts or vice versa. For example if the EURUSD ratio is 2.55, long customer orders exceed short orders by a ratio of 2.55 to 1. Conceptually similar to contrarian analyses using the CFTC IMM open position data or COT Report, the SSI provides an alternative approach that is both more timely and accurate in forecasting currency price movement. The SSI is a contrarian indicator that tells you how the market is weighted and where the trend may head. More long positions don't necessary suggest more confidence in the direction of the current trend. In general, when traders start having adverse movements against their position, many tend to increase the size of their position with the purpose to average down their entry price in one last attempt to recover from previous losses. However, the higher the number of short orders in a bull market the more dangerous is to take additional shorts because many of those traders who just entered the markets are also leaving their protective stop losses just above the current price action.


Historical Charts of Speculative Positioning




EURUSD - In the last three years, the SSI has been working particularly well during trending markets and the contrarian nature of the ratio continues to call for more EURUSD gains and a possible reversal to 1.36. This week, the ratio of long to short positions in the EURUSD stands at negative 1.8 as nearly 64% of traders are short. Yesterday, the ratio was at -1.91 as 66% of open positions were short. In detail, long positions are 3.7% higher than yesterday and 17.1% weaker since last week. Short positions are 2% lower than yesterday and 2.8% stronger since last week. Open interest is 0.1% weaker than yesterday and 16.8% below its monthly average.





GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.22 as nearly 55% of traders is long. Yesterday, the ratio was at 1.21 as 55% of open positions were long. In detail, long positions are 2.0% higher than yesterday and 1.8% weaker since last week. Short positions are 1.0% higher than yesterday and 1.0% weaker since last week. Open interest is 1.5% stronger than yesterday and 15.8% below its monthly average. The SSI signals more GBPUSD losses.






USDCHF - The ratio of long to short positions in the USDCHF stands at 1.88 as nearly 65% of traders is long. Yesterday, the ratio was at 1.85 as 65% of open positions were long. In detail, long positions are 1.4% lower than yesterday and 14.5% weaker since last week. Short positions are 2.8% lower than yesterday and 4.3% weaker since last week. Open interest is 1.9% weaker than yesterday and 28.9% below its monthly average. Looking ahead, the SSI signals more USDCHF losses.






USDJPY - The ratio of long to short positions in the USDJPY stands at -2.36 as nearly 70% of traders are short. Yesterday, the ratio was at -2.22 as 69% of open positions were short. In detail, long positions are 4.7% lower than yesterday and 14.9% weaker since last week. Short positions are 1.3% higher than yesterday and 41.2% stronger since last week. Open interest is 0.6% weaker than yesterday and 9.9% below its monthly average. The SSI is a contrarian indicator and signals more USDJPY gains.






USDCAD - The ratio of long to short positions in the USDCAD stands at 5.64 as nearly 85% of traders is long. Yesterday, the ratio was at 5.44 as 84% of open positions were long. In detail, long positions are 3.4% higher than yesterday and 17.8% stronger since last week. Short positions are 0.4% lower than yesterday and 11.3% weaker since last week. Open interest is 2.8% stronger than yesterday and 1.1% below its monthly average. The SSI signals more USDCAD losses.

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