EUR/USD Speculative Positioning Signals a Break Above 1.3377
GBP/USD Short Orders are 21 Percent stronger
USD/JPY Sentiment Remains Relatively Neutral
USD/CHF Ratio Calls for More Swiss Franc Gains
USD/CAD Positioning Grew Less Net Long
Ratios
(Negative ratio indicates net short)
Currency
Last Week
Present
% Long
% Change in Positions Outstanding
Signal
EUR/USD
-1.42
[B]-1.22
[/B]
45%
1.77%
Bullish
[B]GBP/USD[/B][B]
[/B]
-1.77
[B]-1.41
[/B]
41%
8.98%
Bullish
[B]USD/JPY[/B][B]
[/B]
1.11
[B]1.02
[/B]
51%
45.13%
Bearish
[B]USD/CHF[/B][B]
[/B]
2.42
[B]2.39
[/B]
70%
14.49%
Bearish
[B]USDCAD
[/B]
1.59
[B]1.49
[/B]
60%
11.04%
Bearish
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.
EURUSD Traders positioning flipped to net short in October and has remained practically unchanged since then, coinciding with 700 pips appreciation in the currency pair and confirming the accuracy of the SSI as a contrarian indicator. Today, the ratio of longs to shorts is -1.22 as 55% of the currently open orders are short. Long orders are 1.6% higher than yesterday and 10.1% stronger since last week. Short orders are 1.1% higher than yesterday and 4.1% weaker since last week. Open interest is 1.3% stronger than yesterday and 29.3% above its monthly average. The positioning ratio continues to favor EURUSD strength in the week ahead and resembling what our technical analyst Jamie Saettele said this morning, We are expecting a break above 1.3377 and ultimately 1.3413 with 1.3302 holding as support. 1.3483, the 3/11/2005 high, is potential resistance on a break above 1.3413.
GBPUSD - The sterling positioning ratio flipped to net short in October and has remained mostly net short since then. This week, the ratio of longs to shorts is -1.41 as 58.5% of the currently open orders are short. Long orders are 6.5% higher than yesterday and 21.4% stronger since last week. Short orders are 4.7% higher than yesterday and 1.5% stronger since last week. Open interest is 5.5% stronger than yesterday and 25.2% above its monthly average. Looking ahead, the SSI signals GBPUSD strength.
[B]
[/B] USDCHF - The ratio of longs to shorts is 2.38 as 70% of the currently open orders are long. Long orders are 1% higher than yesterday and 13.4% stronger since last week. Short orders are 1.9% higher than yesterday and 17.9% stronger since last week. Open interest is 1.3% stronger than yesterday and 17.8% above its monthly average. Looking ahead, the SSI signals USDCHF weakness.
USDJPY - Yen positioning has remained mostly net short since December 2006 but recently the ratio flipped to net long. Today, the ratio of longs to shorts is 1.02 as 50.6% of the currently open orders are long. Long orders are 7.8% higher than yesterday and 42.6% stronger since last week. Short orders are 2.5% higher than yesterday and 47.7% stronger since last week. Open interest is 5.1% stronger than yesterday and 44.9% above its monthly average. Looking ahead, the SSI signals USDJPY weakness
USDCAD - The ratio of longs to shorts is 1.49 as 59.9% of the currently open orders are long. Long orders are 1.4% higher than yesterday and 8% stronger since last week. Short orders are 0.2% higher than yesterday and 16.1% stronger since last week. Open interest is 0.9% stronger than yesterday and 4.9% above its monthly average. Looking ahead, the SSI signals USDCAD weakness.
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**Twice a day SSI can be found on FXCMTR under Intraday Analytics