EURUSD – Our forex sentiment-based forecast for the Euro/US Dollar has remained relatively neutral, as trading crowds remain effectively balanced in their positioning on the pair. The ratio of long to short positions in the EURUSD stands at 1.00 as an equal number of traders are long and short the EUR/USD. This has remained unchanged since yesterday, but we do note that long positions have grown an impressive 24.2 percent since last week. Increasingly EUR/USD-bullish crowd sentiment gives us a modestly bearish contrarian trading bias, but positioning is nowhere near extreme enough to make a forceful prediction. Our sentiment-based forex trading signals are accordingly flat the Euro/US dollar through current price action.
USDJPY – Our contrarian forex trading strategies continue to sell the US Dollar/Japanese Yen currency pair, as forex trading crowds remain very bullish the USD/JPY. The ratio of long to short positions in the USDJPY stands at 1.54 as nearly 61% of traders are long. Yesterday, the ratio was at 1.67 as 63% of open positions were long. In detail, long positions are 4.0% higher than yesterday and 13.5% stronger since last week. Short positions are 13.2% higher than yesterday and 10.0% weaker since last week. Open interest is 7.5% stronger than yesterday and 36.5% below its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses. Yet a modest pullback in longs weakens the strength of our forecast.
GBPUSD – Our forex trading strategies recently bought the British Pound against the US Dollar, as a sharp shift in forex sentiment signaled that further gains were likely. The ratio of long to short positions in the GBPUSD stands at -1.04 as nearly 51% of traders are short. A net-short bias is a sharp departure from last week, when the majority of traders were aggressively long the pair. Indeed, GBP/USD short positions are 25.2 percent higher overnight and a massive 76.7 percent above levels seen last week. Our SSI is a contrarian indicator, and the sharp drive towards GBP/USD short positions signals that further gains are likely. Discuss the British Pound with other traders in our forex forum.
alt=""id="BLOGGER_PHOTO_ID_5297854676853539778" />USDCHF – Our sentiment-based bias on the USD/CHF remains relatively neutral, as traders sentiment does not point to gains or losses and open interest is well-below its medium-term average. The ratio of long to short positions in the USDCHF stands at 1.07 as nearly 52% of traders are long. Yesterday, the ratio was at 1.08 as 52% of open positions were long. In detail, long positions are 18.3% higher than yesterday and 6.5% stronger since last week. Short positions are 19.3% higher than yesterday and 2.8% stronger since last week. Open interest is 18.8% stronger than yesterday and 28.3% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses. All the same, our forex trading signals are currently aggressively long the USD/CHF.
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USDCAD – The ratio of long to short positions in the USDCAD stands at 1.07 as nearly 52% of traders are long. Yesterday, the ratio was at 1.09 as 52% of open positions were long. In detail, long positions are 3.1% higher than yesterday and 16.1% stronger since last week. Short positions are 5.2% higher than yesterday and 17.1% stronger since last week. Open interest is 4.1% stronger than yesterday and 40.4% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses, but the heavily below-average open interest gives us little faith in these forecasts. 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.
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