EURUSD – Euro Forecast to Decline Following ECB Rate Decision
USDJPY – Japanese Yen May Reverse on Sentiment Shift
GBPUSD – British Pound Forecast Remains Bearish
USDCHF – US Dollar/Swiss Franc Expected to Rally
USDCAD – Canadian Dollar Forecast to Decline Against USD
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
Historical Charts of Speculative Forex Trading Positioning
EURUSD – Forex trading crowds continue to aggressively buy the Euro against the US Dollar, and our contrarian analysis forecasts that the EUR/USD will decline further. The ratio of long to short positions in the EURUSD stands at 1.43 as nearly 59% of traders are long. Yesterday, the ratio was at 1.29 as 56% of open positions were long. In detail, long positions are 19.0% higher than yesterday and 45.9% stronger since last week. Short positions are 7.4% higher than yesterday and 44.3% stronger since last week. Open interest is 13.9% stronger than yesterday and 54.2% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses. Our sentiment-based forex trading signals are accordingly short the EUR/USD.
USDJPY – Our contrarian forex trading strategies recently closed their USD/JPY long positions, as forex sentiment highlights risks of a near-term reversal. Forex positioning is currently balanced on the USD/JPY, as an equal number of traders are currently long and short the pair. This represents a clear shift from recent price action, when traders aggressively sold the USD/JPY into impressive rallies. In detail, long positions are 26.4% higher than yesterday and 15.0% stronger since last week. Short positions are 9.8% higher than yesterday and 41.8% stronger since last week. Open interest is 17.5% stronger than yesterday and 2.0% above its monthly average. The SSI is a contrarian indicator, and the recent jump in USD/JPY long positions warns of a potential short-term reversal.
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 1.27 as nearly 56% of traders are long. Yesterday, the ratio was at 1.18 as 54% of open positions were long. In detail, long positions are 32.0% higher than yesterday and a massive 100.7% stronger since last week. Short positions are 22.9% higher than yesterday and 25.0% stronger since last week. Open interest is 27.8% stronger than yesterday and 51.4% above its monthly average. Aggressive forex crowd GBP/USD buying signals that further losses are likely.
USDCHF – The ratio of long to short positions in the USDCHF stands at -1.33 as nearly 57% of traders are short. Yesterday, the ratio was at -1.13 as 53% of open positions were short. In detail, long positions are 11.6% higher than yesterday and 21.1% stronger since last week. Short positions are 31.3% higher than yesterday and 54.7% stronger since last week. Open interest is 22.0% stronger than yesterday and 5.7% 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 – The ratio of long to short positions in the USDCAD stands at -1.63 as nearly 62% of traders are short. Yesterday, the ratio was at -1.91 as 66% of open positions were short. In detail, long positions are 20.4% higher than yesterday and 8.8% stronger since last week. Short positions are 3.0% higher than yesterday and 121.4% stronger since last week. Open interest is 9.0% stronger than yesterday and 23.8% 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 drodriguez@dailyfx.com.
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.
