[I]EURUSD - Positioning Grows less Net Short on Profit taking
GBPUSD - Open Interest falls nearly 23 percent
USDJPY - Carry Trade sentiment remained relatively unchanged
USDCHF - Long Positioning is extreme as 81 percent of traders are long
USDCAD - Positions Outstanding rose 23% mostly on demand for US dollars
[/I]
EURUSD - 58% of retail traders are short EURUSD (long to short ratio is -1.41) according to a sample of FXCM?s customer flow. However, since last week, retail has been buying the EURUSD. In detail, long positions are 22.4% higher than yesterday and 13.3% stronger since last week. On the other hand, short positions are 17% lower than yesterday and 11.1% weaker since last week. When retail is short but reduces its exposure, the long term direction remains bullish but the market might have some downside in the short term. The SSI gives us a medium strength SIGNAL TO BUY EURUSD.
GBPUSD - The ratio of long to short positions in the GBPUSD stands at -1.39 as nearly 58% of traders are short. Yesterday, the ratio was at -1.73 as 63% of open positions were short. In detail, long positions are 5.8% higher than yesterday and 6% stronger since last week. Short positions are 14.6% lower than yesterday and 36.0% weaker since last week. Open interest is 7.1% weaker than yesterday and 22.5% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.
USDCHF - The ratio of long to short positions in the USDCHF stands at 4.21 as nearly 81% of traders are long. Yesterday, the ratio was at 7.56 as 88% of open positions were long. In detail, long positions are 17.0% lower than yesterday and 24.6% stronger since last week. Short positions are 49.0% higher than yesterday and 16.8% stronger since last week. Open interest is 9.3% weaker than yesterday and 2.6% 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 1.86 as nearly 65% of traders are long. Yesterday, the ratio was at 1.91 as 66% of open positions were long. In detail, long positions are 0.1% higher than yesterday and 15.1% weaker since last week. Short positions are 2.9% higher than yesterday and 31.8% stronger since last week. Open interest is 1.1% stronger than yesterday and 1.7% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.
USDCAD - The ratio of long to short positions in the USDCAD stands at 3 as nearly 75% of traders are long. Yesterday, the ratio was at 2.85 as 74% of open positions were long. In detail, long positions are 1.7% higher than yesterday and 20.7% weaker since last week. Short positions are 7.2% lower than yesterday and 30.4% stronger since last week. Open interest is 0.6% weaker than yesterday and 0.8% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.
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.
For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.FXCMManagedFunds.com or call +1 646-432-2968