EURUSD – Euro Forecast to Rally Against US Dollar
USDJPY – Japanese Yen to Continue Gaining against USD
GBPUSD – British Pound Forecast Remains Aggressively Bearish
USDCHF – Swiss Franc Forecast to Drop Further on Forex Sentiment
USDCAD – Canadian Dollar Expected to Decline Against USD
[I]While the SSI is available once a week on DailyFX.com, you can receive SSI readings twice a day in DailyFX Plus Forex Intraday Trading Signals
The SSI sought a EURUSD rally since 1.26 and was signaling a reversal around 1.60. Find our more in the DailyFX Forex Forum[/I]
Historical Charts of Speculative Forex Trading Positioning
EURUSD – Forex crowds have aggressively sold into Euro/US Dollar rallies, and our contrarian indicator forecasts further EUR/USD gains. The ratio of long to short positions in the EURUSD stands at -1.03 as nearly 51% of traders are short. This is a clear shift from yesterday, when the ratio was at 1.17 as 54% of open positions were long. In detail, long positions are 4.4% higher than yesterday and 22.0% stronger since last week. Short positions are 26.0% higher than yesterday and 63.2% stronger since last week. Open interest is 14.4% stronger than yesterday and 51.7% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains. Our sentiment-based forex trading signals are accordingly long the EUR/USD.
USDJPY – Our contrarian forex trading strategies recently went short the US Dollar against the Japanese Yen, as forex sentiment highlights risks of further USD/JPY weakness. The ratio of long to short positions in the USDJPY stands at 1.16 as nearly 54% of traders are long. Yesterday, the ratio was at 1.04 as 51% of open positions were long. In detail, long positions are 29.0% higher than yesterday and 40.3% stronger since last week. Short positions are 15.7% higher than yesterday and 61.6% stronger since last week. Open interest is 22.5% stronger than yesterday and 6.9% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.
GBPUSD – One-sided trader sentiment has left our forex trading strategies heavily short the GBP/USD. The ratio of long to short positions in the GBPUSD stands at 1.88 as nearly 65% of traders are long. Yesterday, the ratio was at 1.62 as 62% of open positions were long. In detail, long positions are 25.1% higher than yesterday and 121.3% stronger since last week. Short positions are 7.5% higher than yesterday and 16.4% weaker since last week. Open interest is 18.4% stronger than yesterday and 60.2% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.
USDCHF – A massive US Dollar/Swiss Franc rally has invited aggressive USD/CHF selling, and our contrarian indicator gives signal that the pair may continue to rally. The ratio of long to short positions in the USDCHF stands at -2.68 as nearly 73% of traders are short. Yesterday, the ratio was at 1.34 as 57% of open positions were long. In detail, long positions are 41.1% lower than yesterday and 12.0% weaker since last week. Short positions are an incredible 111.5% higher than yesterday and 79.8% stronger since last week. Open interest is 24.2% stronger than yesterday and 23.8% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF gains. Our forex trading signals are accordingly long the USD/CHF.
USDCAD – Aggressive crowd selling of the US Dollar/Canadian Dollar gives us a contrarian signal that the USD/CAD may break major highs. The ratio of long to short positions in the USDCAD stands at -1.67 as nearly 63% of traders are short. Yesterday, the ratio was at -2.03 as 67% of open positions were short. In detail, long positions are 6.7% higher than yesterday and 6.7% weaker since last week. Short positions are 12.2% lower than yesterday and 98.4% stronger since last week. Open interest is 6.0% weaker than yesterday and 16.1% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD gains. Tell us and other traders what you think in our forex forum.
How do we 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.
Have any further questions about the SSI and forex positioning data? Ask the author David Rodríguez on our forex forum.
We love getting feedback on our reports. Tell us how we’re doing: E-mail the author of this report at <[email protected]>.
For information on an FXCM Managed Account that takes advantage of the SSI, please review our Sentiment Program at: http://www.fxcmmanagedaccounts.com/ or call +1 646-432-2968.