EURUSD – Euro Forecast Bullish against US Dollar Following Fed
USDJPY – Japanese Yen to Continue Gaining against USD
GBPUSD – British Pound Forecast Turns Marginally Bullish
USDCHF – Swiss Franc Forecast to Gain Against USD
USDCAD – Canadian Dollar Expected to Appreciate 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 – Forex crowds have aggressively sold into Euro/US Dollar rallies, and our contrarian indicator forecasts that it may continue to gain. The largest-ever percentage gain in the EUR/USD has invited aggressive selling. Yet it is worthwhile to note that many traders have given up their short positions—hinting at signs of reversal. The ratio of long to short positions in the EURUSD stands at -1.10 as nearly 52% of traders are short. Yesterday, the ratio was at -1.12 as 53% of open positions were short. In detail, long positions are 9.6% lower than yesterday and 1.2% weaker since last week. Short positions are 10.8% lower than yesterday and 26.1% stronger since last week. Open interest is 10.2% weaker than yesterday and 24.3% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains. Our sentiment-based forex trading signals are accordingly long the EUR/USD.
USDJPY – Our contrarian forex trading strategies remain short the US Dollar against the Japanese Yen, as forex sentiment highlights risks of further USD/JPY weakness. The ratio of long to short positions in the USDJPY stands at 1.39 as nearly 58% of traders are long. Yesterday, the ratio was at -1.14 as 53% of open positions were short. In detail, long positions are 29.7% higher than yesterday and 26.3% stronger since last week. Short positions are 17.9% lower than yesterday and 6.6% weaker since last week. Open interest is 4.4% stronger than yesterday and 0.8% below its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.
GBPUSD – Increasingly indecisive British Pound/US Dollar positioning has left our forex trading strategies effectively flat the GBP/USD. The ratio of long to short positions in the GBPUSD stands at 1.02 as nearly 51% of traders are long. Yesterday, the ratio was at 1.47 as 60% of open positions were long. In detail, long positions are 25.9% lower than yesterday and 16.0% stronger since last week. Short positions are 6.5% higher than yesterday and 28.4% stronger since last week. Open interest is 12.8% weaker than yesterday and 29.0% above its monthly average. The jump in short interest and a wave of profit taking on longs suggests that the GBP/USD may continue to rally through near-term trade.
USDCHF – The ratio of long to short positions in the USDCHF stands at 1.45 as nearly 59% of traders are long. Yesterday, the ratio was at -1.82 as 64% of open positions were short. In detail, long positions are 58.8% higher than yesterday and 50.6% stronger since last week. Short positions are 39.7% lower than yesterday and 5.3% stronger since last week. Open interest is 4.7% weaker than yesterday and 8.0% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses. Our forex trading signals are accordingly short the USD/CHF.
USDCAD – The ratio of long to short positions in the USDCAD stands at 1.24 as nearly 55% of traders are long. Yesterday, the ratio was at -1.19 as 54% of open positions were short. In detail, long positions are 2.0% higher than yesterday and 39.3% stronger since last week. Short positions are 30.8% lower than yesterday and 4.1% stronger since last week. Open interest is 15.8% weaker than yesterday and 0.5% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses. Tell us and other traders what you think in our forex forum.
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.