? EURUSD – Contrarian Traders Target euro at 1.45!
? GBPUSD –The ratio of Short to Long positions stands at 2.25
? USDJPY – Carry Traders Increase Exposure as the USDJPY Moves Lower
? USDCHF – Positions Outstanding Rise by Nearly 20 Percent
? USDCAD – Long Positioning Grows Less Extreme. This could be the bottom in USDCAD!
EURUSD – The ratio of long to short positions in the EURUSD stands at -2.96 as nearly 75% of traders are short, according to our real-time survey on the positioning of more than 20.000 traders. Moreover, since last week, retail has been aggressively selling EURUSD (short positions are up by 18.8%). 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 euros against the U.S. dollar.
GBPUSD - The ratio of long to short positions in the GBPUSD stands at -2.25 as nearly 69% of traders are short. Yesterday, the ratio was at -1.72 as 63% of open positions were short. In detail, long positions are 5.1% lower than yesterday and 31.6% weaker since last week. Short positions are 24.2% higher than yesterday and 82.1% stronger since last week. Open interest is 13.4% stronger than yesterday and 0.1% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.
USDJPY - The ratio of long to short positions in the USDJPY stands at 1.82 as nearly 65% of traders are long. Yesterday, the ratio was at 1.23 as 55% of open positions were long. In detail, long positions are 33.5% higher than yesterday and 18.6% stronger since last week. Short positions are 9.6% lower than yesterday and 1.5% stronger since last week. Open interest is 14.2% stronger than yesterday and 21.6% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.
USDCHF - The ratio of long to short positions in the USDCHF stands at 2.25 as nearly 69% of traders are long. Yesterday, the ratio was at 2.02 as 67% of open positions were long. In detail, long positions are 23.9% higher than yesterday and 11.8% stronger since last week. Short positions are 11.6% higher than yesterday and 45.0% stronger since last week. Open interest is 19.8% stronger than yesterday and 16.1% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.
USDCAD - The ratio of long to short positions in the USDCAD stands at 4.09 as nearly 80% of traders are long. Yesterday, the ratio was at 4.25 as 81% of open positions were long. In detail, long positions are 1.1% lower than yesterday and 1.1% weaker since last week. Short positions are 2.9% higher than yesterday and 39.0% stronger since last week. Open interest is 0.3% weaker than yesterday and 7.0% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.
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.
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