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Shift in Sentiment Signals US Dollar Weakness Against Swiss Franc
Thursday, 11 December 2008 15:13:50 GMT  |  David Rodriguez, Quantitative Analyst
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USD/CHF Ratio: 1.08
Trading Forecast: Bearish

Forex_Sentiment_2008-12-11_5

USDCHF - Forex trader sentiment has recently turned bullish the US dollar against the Swiss Franc—giving a clear contrarian signal to sell the USD/CHF pair. In fact, trading crowds had remained net-short the USD/CHF for a nearly-uninterrupted 8-month stretch before flipping their bias through recent price action. The ratio of long to short positions in the USD/CHF stands at a nearly-neutral 1.06, as 51 percent of traders are long. Typically this is not enough of an extreme bias to warrant attention, but the clear shift in positioning does favor USD/CHF weakness. In fact, yesterday’s ratio was at -1.74 as 63% of open positions were short. The SSI is a contrarian indicator and signals more USDCHF losses. Our SSI-based trading signals accordingly sold the USD/CHF at 1.2048 and 1.1949.

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