EURUSD – Euro Forecast to Decline According to Forex Sentiment
USDJPY – Japanese Yen Expected to Recover Versus US Dollar
GBPUSD – British Pound Outlook Muted Following Bank of England
USDCHF – Swiss Franc Forecast to Gain Against USD
USDCAD – Canadian Dollar Expected to Appreciate Against US Dollar
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
[I]The SSI sought a EURUSD rally since 1.26 and was signaling a reversal around 1.60. Find our more in the DailyFXForex Forum
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Historical Charts of Speculative Forex Trading Positioning
EURUSD – Our forex trading signals recently sold the Euro against the US Dollar, as shifts in forex sentiment signaled that further EUR/USD losses are likely. The ratio of long to short positions in the EURUSD stands at 1.17 as nearly 54% of traders are long. Yesterday, the ratio was at -1.25 as 56% of open positions were short. In detail, long positions are 35.6% higher than yesterday and 14.5% stronger since last week. Short positions are 7.5% lower than yesterday and 14.1% stronger since last week. Open interest is 11.6% stronger than yesterday and 39.3% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses.
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 1.03 as nearly 51% of traders are long. Yesterday, the ratio was at -1.22 as 55% of open positions were short. In detail, long positions are 14.0% higher than yesterday and 15.1% stronger since last week. Short positions are 9.3% lower than yesterday and 16.7% stronger since last week. Open interest is 1.2% stronger than yesterday and 11.6% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses. Such analysis lines up nicely with Forex Futures data, which shows that the USD/JPY may decline through the medium term.
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 -1.05 as nearly 51% of traders are short. Yesterday, the ratio was at -1.60 as 61% of open positions were short. In detail, long positions are 38.6% higher than yesterday and 9.3% weaker since last week. Short positions are 9.1% lower than yesterday and 53.5% stronger since last week. Open interest is 9.3% stronger than yesterday and 47.8% above its monthly average. On balance, the recent surge in long positions gives us a marginally bearish bias. Yet the nearly-neutral SSI ratio limits confidence in sentiment-based forecasts.
USDCHF –The ratio of long to short positions in the USDCHF stands at -1.09 as nearly 52% of traders are short. Yesterday, the ratio was at 1.32 as 57% of open positions were long. In detail, long positions are 31.0% lower than yesterday and 10.2% weaker since last week. Short positions are 1.4% lower than yesterday and 30.6% stronger since last week. Open interest is 18.2% weaker than yesterday and 11.6% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF gains. 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 2.05 as nearly 67% of traders are long. Yesterday, the ratio was at 1.34 as 57% of open positions were long. In detail, long positions are 50.9% higher than yesterday and 125.5% stronger since last week. Short positions are 1.5% lower than yesterday and 45.7% weaker since last week. Open interest is 28.5% stronger than yesterday and 44.7% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses. Our forex trading signals are accordingly short the USD/CAD.
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.