The ratio of long to short positions in the GBP/USD stands at 1.67 as 63% of traders are long. Yesterday the ratio was 1.21; 55% of open positions were long. Long positions are 12.5% higher than yesterday and 15.2% above levels seen last week. Short positions are 18.3% lower than yesterday and 16.6% below levels seen last week.
We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the GBP/USD may continue lower. The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias.
With only a little over an hour left until the close of trading for this week, here’s what you can look forward to next week…NFP, 4 central bank rate decisions and more!
The Speculative Sentiment Index (SSI) for USD/CAD just flipped from net short to net long. Since SSI is a contrarian indicator, this points to a possible top in the pair.
You can view real-time SSI positioning data in DailyFX on Demand. Access to DailyFX on Demand is now free for a limited time during the 2015 FXCM Open House.
EUR/USD has dropped below the 1.1100 level to a new 11-year low! The DailyFX Support & Resistance Wizard sees the next significant support level at 1.0970
The DailyFX Support & Resistance Wizard automatically adds the DailyFX list of support and resistance levels directly to your charts which can also help you identify trading breakouts.
DailyFX strategist James Stanley is hosting a webinar today at 1pm ET (18:00 GMT) discussing the use of the support/resistance wizard to search for breakouts and also how to access the wizard free for a limited time during the 2015 FXCM Open House which will soon come to an end. Webinar: Trading Breakouts - Support and Resistance identification
In his latest strategy video, DailyFX Chief Currency Strategist John Kicklighter discusses the importance of the upcoming ECB rate decision and it’s potential impact on markets.
[I]Talking Points:
• The ECB announced its QE program at its January meeting, but details were saved for this meeting
• A fresh 11-year low from EUR/USD Wednesday and jump in implied volatility shows this still moves markets
• This event is critical to the steady bearish trend on the Euro and EUR/USD [/I]
DailyFX analysts, instructors and strategists cover economic announcements, data prints and price movements as they happen in the Ultimate Trading Room at DailyFX on Demand which is now free for a limited time during the 2015 FXCM Open House.
The Euro losses continue to mount as EUR/USD drops below 1.1000 for the first time since 2003! Looking at the monthly candlestick chart for the past 15 years, one wonders how low this may drop.
According to the weekly SSI report from DailyFX strategist David Rodriguez, positioning data indicates the Euro downtrend remains intact.
EURUSDThe ratio of long to short positions in the EURUSD stands at 1.12 as 53% of traders are long. Yesterday the ratio was 1.38; 58% of open positions were long. Long positions are 7.7% lower than yesterday and 19.6% above levels seen last week. Short positions are 14.4% higher than yesterday and 17.1% above levels seen last week. Open interest is 1.6% higher than yesterday and 10.9% above its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the EURUSD may continue lower. The trading crowd has grown less net-long from yesterday but further long since last week.
Trader indecision makes it difficult to establish a firm trading bias, but the overall downtrend keeps our attention lower in the EURUSD.
The StrongWeak* standalone app provides an easy-to-read interface showing the strongest and weakest major currency movers. It aggregates movements (gains and losses) of a base currency against all other major currencies. (Ex: If EUR/USD rose 50 pips yesterday, then EUR reads +50 and USD reads -50). This is calculated across all major pairs.
The app also shows the absolute strongest and weakest currencies for four timeframes (M15, H1, H4, D1) and shows the related currency pair. The latest readings show that CHF is currently the weakest currency and that GBP/CHF is the weakest pair on both hourly and daily charts.
* For a limited time, StrongWeak is free to download at FXCMapps.com as part of FXCM Open House 2015. The DailyFX analysts will be hosting a webinar this Tuesday at 10am New York Timethat will discuss how to analyze trading opportunities using this app.
In his latest video, DailyFX Chief Currency Strategist John Kicklighter discusses the following:
[I]Talking Points[/I]
• Analysis brings us to the highest probability trading scenarios, but sometimes markets surprise
• It’s important to be prepared for a change in market conditions with strong ‘alternative scenario’ trades
• We look at trends of various conviction - risk, Euro and Dollar - and assess best alternatives
DailyFX analysts, instructors and strategists cover economic announcements, data prints and price movements as they happen in the Ultimate Trading Room at DailyFX on Demand which is free for a limited time during FXCM Open House 2015.
According to the latest Forex Correlations report by Quantitative Strategist David Rodriguez, "Retail FX Traders have Turned Heavily Short the Euro—A Contrarian Signal that Price has Turned
“The risk of material volatility grows ahead of the highly-anticipated FOMC meeting for a clear reason: the correlation between the Euro, US Dollar, and interest rates trades near important highs.”
[B]Strong Link between European Yields, US Treasury Yields, and EURUSD Underlines Risk[/B]
We’ve seen incredible moves in the EUR/USD following the FOMC rate decision/press conference, and retail volume at FXCM for EUR/USD has hit its highest level for a 4-hour period since at least 2010 with over 5.5 billion traded!
You mentioned: “The trading crowd has grown further net-long from yesterday and last week.”
Could you please inform me more in detail who this trading crowd is? Is this a trading crowd from a specific broker like Etoro? Or from the traders that are logged in on babypips or dailyfx? Or all retail traders from over the whole world including or excluding banks and smart money (the big investors)?
Talking Points:
• Persistent selling in Aussie Dollar has pushed AUDUSD and AUDJPY to extreme 7-straight day declines
• With the extended tumble, the traditional fundamental drivers don’t seem to lend the same intensity
• After mature moves and questionable fundamental motivation, many of AUD crosses are facing major support
[I]Talking Points:[/I]
• The RBA rate decision is this week’s top, scheduled monetary policy event
• Market-derived swaps show a 75 percent probability of a 25bp cut, but Economists are far less convinced
• At the last RBA cut (February 3), there was a notable lack of follow through on AUD selling
Today is Thursday which means quantitative strategist David Rodriguez just released his weekly analysis of the Speculative Sentiment Index (SSI) on DailyFX.com: "Retail forex traders continue buying aggressively into British Pound weakness, and a contrarian view of crowd sentiment leaves us watching for further weakness.
"The ratio of long to short positions in the GBP/USD stands at 2.32 as 70% of traders are long. Yesterday the ratio was 1.03; 51% of open positions were long. Long positions are 59.8% higher than yesterday and 48.1% above levels seen last week. Short positions are 28.8% lower than yesterday and 11.4% below levels seen last week.
“We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the GBP/USD may continue lower. The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias.”
Senior Technical Strategist Jamie Saettele posted the following chart of the Dow Jones-FXCM Dollar Index (ticker: USDOLLAR).
“USDOLLAR continues to respect well-defined parallels. A drop below the lower parallel would indicate an important behavior change and potential for the largest decline since July 2014. At the same time, the median line could provide resistance near 12220.”
[I]Talking Points[/I]
[ul]
[li]USD/CAD attempting break of multi-month range lows / consolidation
[/li][li]Key interim support 1.23- Short scalp bias favored sub-1.2443
[/li][li]Event Risk on Tap This Week
[/li][/ul]
