Retail is aggressively selling the euro

EURUSD - Retail is aggressively selling the euro
GBPUSD - Long to short ratio is -2.22 as 69 percent of retail traders are short
USDJPY - Traders are long and buying more
USDCHF - Positions Outstanding Rise By 20.7 Percent
USDCAD - Nearly 80 percent of traders are long USDCAD


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.


EURUSD - The ratio of long to short positions in the EURUSD stands at -3.21 as nearly 76% of traders are short. Yesterday, the ratio was at -3.35 as 77% of open positions were short. In detail, long positions are 9.1% higher than yesterday and 18.8% weaker since last week. Short positions are 4.5% higher than yesterday and 10.1% stronger since last week. Open interest is 5.6% stronger than yesterday and 1.9% above its monthly average. In the past, when retail was short and selling more, the EURUSD has rallied in the following days. The SSI gives us a STRONG SIGNAL TO BUY EURUSD.


GBPUSD - 69% of retail traders are short (long to short ratio is -2.22). However, retail has been buying the GBPUSD (long positions are up by 2.7% since last week). When retail is short but reduces its exposure, the long term direction remains bullish but the market might have some downside in the short term. The SSI gives us a MEDIUM SIGNAL TO BUY GBPUSD.


USDCHF - The ratio of long to short positions in the USDCHF stands at 6.22 as nearly 86% of traders are long. Yesterday, the ratio was at 6.43 as 87% of open positions were long. In detail, long positions are 3.8% higher than yesterday and 28.8% stronger since last week. Short positions are 7.3% higher than yesterday and 12.2% weaker since last week. Open interest is 4.3% stronger than yesterday and 30.1% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.


USDJPY - The ratio of long to short positions in the USDJPY stands at 1.28 as nearly 56% of traders are long. Yesterday, the ratio was at 1.45 as 59% of open positions were long. In detail, long positions are 2.0% lower than yesterday and 0.6% weaker since last week. Short positions are 11.1% higher than yesterday and 11.6% weaker since last week. Open interest is 3.3% stronger than yesterday and 5.0% below its monthly average. In the past, when retail was long and buying more, the USDJPY has sold off in the following days. The SSI gives us a STRONG SIGNAL TO SELL USDJPY.


USDCAD - The ratio of long to short positions in the USDCAD stands at 3.96 as nearly 80% of traders are long. Yesterday, the ratio was at 3.75 as 79% of open positions were long. In detail, long positions are 3.1% higher than yesterday and 2.4% weaker since last week. Short positions are 2.3% lower than yesterday and 4.5% stronger since last week. Open interest is 2.0% stronger than yesterday and 1.4% above its monthly average. The SSI signals more USDCAD losses.

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