[I][B]USDJPY -[/B] Long Positioning Makes 76% of the Total and this Could Mean More USDJPY Losses on Stops
[B]GBPUSD -[/B] Positions Outstanding fall by nearly 24 percent on GBP/JPY troubles
[B]EURUSD -[/B] Long to Short Positioning is Close to Parity
[B]USDCHF -[/B] Short positions are up by 78% since last week
[B]USDCAD -[/B] Open interest is down by 6.5% on Profit Taking
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[B]USDJPY -[/B] According to out latest dealing data, the ratio of long to short positions in the USDJPY stands at 3.15 as nearly 76% of traders are long. Yesterday, the ratio was at 2.07 as 67% of open positions were long. In detail, long positions are 9.6% higher than yesterday and 37.9% stronger since last week. Open interest is 2.7% weaker than yesterday and 10.6% below its monthly average. 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, in the past, when retail was long and buying more, the USDJPY has sold off in the following days.
[B]EURUSD -[/B] 52% of retail traders are short EURUSD (long to short ratio is -1.09). However, since last week, retail has been buying the EURUSD (long positions are up by 6%). 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 SIGNAL TO BUY EURUSD.
[B]GBPUSD -[/B] 52% of retail traders are long GBPUSD (long to short ratio is 1.07). Last week, the ratio was at -2.49 as 71% of open positions were short. Moreover, since last week, retail has been aggressively buying GBPUSD (long positions are up by 38.2%). In the past, when retail was long and buying more, the GBPUSD has sold off in the following days. The SSI gives us a STRONG SIGNAL TO SELL GBPUSD.
[B]USDCHF -[/B] The ratio of long to short positions in the USDCHF stands at 1.89 as nearly 65% of traders are long. Yesterday, the ratio was at 4.07 as 80% of open positions were long. In detail, long positions are 33.1% lower than yesterday and 43.6% weaker since last week. Short positions are 43.7% higher than yesterday and 77.9% stronger since last week. Open interest is 18.0% weaker than yesterday and 23.7% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.
[B]USDCAD -[/B] 71% of retail traders are long USDCAD (long to short ratio is 2.46). However, since last week, retail has been selling the USDCAD (short positions are up by 11.4%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a MEDIUM SIGNAL TO SELL USDCAD.
[B]How to Interpret the SSI?[/B] 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.
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