EURUSD - Retail Traders Have Been Short Euros For the Past Seven Months

USDJPY - Ratio Grows Less Net Short With Longs Up By 20% Since Last Week

GBPUSD - Positioning Flips To Net Short and Calls For Sterling Strength

USDCHF - Short Positions Are 13.8% Weaker Since Last Week

USDCAD - Positions Outstanding Rose By Nearly 17 Percent

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 donâ€™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.

Historical Charts of Speculative Positioning

EURUSD - Over the past seven months, retail traders have remained bearish in the euro, confirming the precision of the ratio as a contrarian indicator and pointing for more euro strength in the week ahead. This week, the ratio of long to short positions in the EURUSD stands at -1.23 as nearly 55% of traders are short. Yesterday, the ratio was at -1.65 as 62% of open positions were short. In detail, long positions are 26.4% higher than yesterday and 26.1% stronger since last week. Short positions are 5.5% lower than yesterday and 9.1% weaker since last week. Open interest is 6.5% stronger than yesterday and 1.8% below its monthly average. The SSI signals more EURUSD gains and possible test to 1.36.

GBPUSD - This week, the ratio of long to short positions in the sterling stands at negative 1.47 as nearly 59% of traders are short. Yesterday, the ratio was at -1.52 as 60% of open positions were short. In detail, long positions are 4.5% higher than yesterday and 25.4% weaker since last week. Short positions are 0.5% higher than yesterday and 42.1% stronger since last week. Open interest is 2.1% stronger than yesterday and 4.0% above its monthly average. The SSI signals more GBPUSD gains in the week ahead.

USDCHF - The ratio of long to short positions in the Swiss franc stands at 1.97 as nearly 66% of traders is long. Yesterday, the ratio was at 2.16 as 68% of open positions were long. In detail, long positions are 2.1% lower than yesterday and 0.5% stronger since last week. Short positions are 7.6% higher than yesterday and 13.8% weaker since last week. Open interest is 1.0% stronger than yesterday and 12.1% below 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 -1.83 as nearly 65% of traders are short. Yesterday, the ratio was at -1.85 as 65% of open positions were short. In detail, long positions are 0.1% higher than yesterday and 20.6% stronger since last week. Short positions are 0.9% lower than yesterday and 12.5% weaker since last week. Open interest is 0.6% weaker than yesterday and 7.3% above its monthly average. The SSI signals more USDJPY gains.

USDCAD - The ratio of long to short positions in the USDCAD stands at 6.87 as nearly 87% of traders is long. Yesterday, the ratio was at 6.56 as 87% of open positions were long. In detail, long positions are 1.2% higher than yesterday and 18.0% stronger since last week. Short positions are 3.4% lower than yesterday and 12.0% stronger since last week. Open interest is 0.6% stronger than yesterday and 25.0% above its monthly average. The SSI signals more USDCAD losses.

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