EURUSD – Euro Forecast Bullish Against US Dollar
USDJPY – Japanese Yen Outlook Shifts on Major Price Moves
GBPUSD – Forex Trading Systems Indecisive on British Pound
USDCHF – Swiss Franc Expected to Rally Versus US Dollar
USDCAD – Canadian Dollar Forecast Bullish Against US Dollar
[I]While the SSI is available once a week on DailyFX.com, you can receive SSI readings twice a day in DailyFX Plus Forex Intraday Trading Signals
The SSI sought a EURUSD rally since 1.26 and was signaling a reversal around 1.60. Find our more in the DailyFX Forex Forum [/I]
Historical Charts of Speculative Forex Trading Positioning
EURUSD – Our forex trading signals bought the Euro against the US Dollar through recent advances, but a more recent decline leaves our algorithmic trading systems flat the EUR/USD. The ratio of long to short positions in the EURUSD stands at -1.36 as nearly 58% of traders are short. Yesterday, the ratio was at -1.43 as 59% of open positions were short. In detail, long positions are 2.4% higher than yesterday and 8.4% weaker since last week. Short positions are 2.5% lower than yesterday and 2.7% stronger since last week. Open interest is 0.5% weaker than yesterday and 6.6% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.
USDJPY – Our contrarian forex trading strategies recently took profits on US Dollar/Japanese Yen short positions, and more recent bounces have brought about a shift in sentiment forecasts. The ratio of long to short positions in the USDJPY stands at 1.24 as nearly 55% of traders are long. Yesterday, the ratio was at 1.74 as 64% of open positions were long. In detail, long positions are 15.7% lower than yesterday and 29.5% stronger since last week. Short positions are 18.5% higher than yesterday and 4.8% stronger since last week. Open interest is 3.2% weaker than yesterday and 14.3% above its monthly average. The net-long ratio gives us an ostensibly bearish bias, but the recent shift in favor of USD/JPY short positions suggests further gains are more likely.
GBPUSD –Our forex trading strategies remain effectively flat the British Pound against the US Dollar, as one system has gone long while another remains short. Such indecisiveness underlines unclear forecasts on near-term GBP/USD trade. The ratio of long to short positions in the GBPUSD stands at -1.02 as nearly 50% of traders are short. Yesterday, the ratio was at -1.02 as 50% of open positions were short. In detail, long positions are 6.2% higher than yesterday and 0.2% stronger since last week. Short positions are 6.6% higher than yesterday and 38.8% stronger since last week. Open interest is 6.4% stronger than yesterday and 38.0% above its monthly average. The SSI is effectively neutral the GBP/USD and does not give clear short-term guidance on likely direction.
USDCHF – Choppy price action in the USD/CHF has left our forex trading strategies flat through recent trade, but one-sided sentiment suggests further USD/CHF losses are likely. The ratio of long to short positions in the USDCHF stands at 1.88 as nearly 65% of traders are long. Yesterday, the ratio was at 1.96 as 66% of open positions were long. In detail, long positions are 12.5% higher than yesterday and 74.0% stronger since last week. Short positions are 17.6% higher than yesterday and 23.6% weaker since last week. Open interest is 14.3% stronger than yesterday and 50.6% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.
USDCAD – Our forex trading signals remain heavily short the US Dollar/Canadian Dollar pair, as extremely one-sided sentiment points to potential for further losses. The ratio of long to short positions in the USDCAD stands at 2.47 as nearly 71% of traders are long. Yesterday, the ratio was at 2.53 as 72% of open positions were long. In detail, long positions are 3.6% higher than yesterday and 46.9% stronger since last week. Short positions are 6.0% higher than yesterday and 13.5% weaker since last week. Open interest is 4.3% stronger than yesterday and 19.8% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.
How do we 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.
Have any further questions about the SSI and forex positioning data? Ask the author David Rodríguez on our forex forum.
We love getting feedback on our reports. Tell us how we’re doing: E-mail the author of this report at <[email protected]>.
For information on an FXCM Managed Account that takes advantage of the SSI, please review our Sentiment Program at: http://www.fxcmmanagedaccounts.com/ or call +1 646-432-2968.