Positioning is nearly evenly split for the GBPUSD as the pair tests the top of a technical trend channel. The ratio of long to short positions stands at 1.01 with nearly 50% of traders long. The pair has hovered near this parity level since flipping back to its positive reading at the beginning of the month. Just last week, 55% of open positions were long with the ratio at 1.24. Also notable in with the tempering in the ratio, short positions grew 14.8% from yesterday and are 69.7% stronger from a week ago. Long positions are only 6.6% fewer than yesterday and 4.9% strong than a week ago. Open interest is only 3.0% stronger from Wednesday, but overall it is 26.2% above its monthly average. Being a contrarian indicator, the GBPUSD signal still calls for further losses, but only until it flips.
[B][I]• EURUSD – Short Positioning Growing As Resistance Nears, Range May Fall
• GBPUSD – Pound Positioning Reaches Parity As Pair Advances, A Flip Could Signal A Break
• USDJPY – Open Interest Rising As Bullish Yen Reading Gains Intensity
• USDCHF – Retail Traders Add To Their Short Swiss Franc Positions As It Works Lower
• USDCAD – Long Positioning Continues To Ease From The Beginning Of The Month[/I][/B]
[I]We have been calling for a rally in the EURUSD since the pair was trading at 1.26. Find our more in the DailyFX Forum.[/I]
[B]Currency[/B] [B]Last Week[/B] [B]Present*[/B] [B]% Long[/B] [B]% Change in Positions Outstanding[/B] [B]Signal[/B] EUR/USD -1.05 [B]-1.79[/B] 36% 6.49% Bullish GBP/USD 1.06 [B]1.01[/B] 50% 29.51% Bearish USD/JPY 1.41 [B]1.86[/B] 65% 32.53% Bearish USD/CHF 1.35 [B]1.66[/B] 63% 22.20% Bearish USD/CAD 2.33 [B]1.93[/B] 66% 2.09% Bearish
* Negative ratio indicates net short
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Historical Charts of Speculative Positioning[/B]
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[B]EURUSD – [/B]Retail positioning has maintained its net short bias for yet another week, suggesting the 1.50 level is still within the market’s sights. The ratio of long to shorts for EURUSD dropped to -1.79, with 64% of traders short, from a far more balanced -1.05 reading from last week. Belief in the pair’s latest upswing has trailed off on both sides of the market as long positions are 18.3% weaker than yesterday and 17.4% lower than a week ago, while short positions have grown 18.8% from Wednesday and 27.0% from a week ago. Open interest grew 2.2% from yesterday and is 15.5% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.
[B]GBPUSD – [/B]Positioning is nearly evenly split for the GBPUSD as the pair tests the top of a technical trend channel. The ratio of long to short positions stands at 1.01 with nearly 50% of traders long. The pair has hovered near this parity level since flipping back to its positive reading at the beginning of the month. Just last week, 55% of open positions were long with the ratio at 1.24. Also notable in with the tempering in the ratio, short positions grew 14.8% from yesterday and are 69.7% stronger from a week ago. Long positions are only 6.6% fewer than yesterday and 4.9% strong than a week ago. Open interest is only 3.0% stronger from Wednesday, but overall it is 26.2% above its monthly average. Being a contrarian indicator, the GBPUSD signal still calls for further losses, but only until it flips.
[B]USDJPY – [/B]Retail sentiment supports a sustained drop in USDJPY. Positioning in the pair grew to 1.86 with nearly 65% of traders long against a 1.50 reading from yesterday and 1.41 standing from last week. Looking into the details, long positions have grown considerably by rising 17.4% from Wednesday and 31.5% from the same period a week ago. Short positions are 5.6% lower than yesterday and 34.6% stronger since last week. Open interest is 8.2% stronger than yesterday and 28.0% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.
[B]USDCHF – [/B]Much like the sentiment reading from USDJPY, USDCHF positioning is pointing to further declines. The ratio of long to short positions rose to 1.66 from 1.52 yesterday 1.35 from last week. Despite the growing bias in the ratio though, both long and short positioning have grown with open interest up 11.6% from Wednesday and 11.9% above its monthly average. Long positions were 15.6% higher than yesterday and 25.5% stronger since last week. At the same time, short holdings grew 5.5% from yesterday and are 17.1% stronger since last week. The SSI is a contrarian indicator and signals more USDCHF losses.
[B]USDCAD – [/B]Long USDCAD positioning eased over the past week as the ratio of long to shorts dipped from 2.33 to 1.93. From yesterday however, the ratio actually rose from 1.80 when 64% of open positions were long. Looking into the details, long positions are only 1.1% greater than Wednesday and 2.6% weaker from the same time last week. Short positions are 5.9% lower than yesterday and 12.6% stronger since last week. Overall, open interest is 1.4% weaker than yesterday and 6.1% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.
[I]Have comments or questions on this or other articles authored by John? [/I]E-mail him at [B][email protected].[/B]
[I] What do you think will happpen to the GBP/USD? Post your opinions in the DailyFX Forum.[/I]
[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.
[B]For information on an FXCM Managed Account that takes advantage of the SSI, [/B]please review our Sentiment Program at: [U]Portal - FXCM.com or call +1 646-432-2968.