fxcm speculative sentiment index

FXCM SSI: EURUSD Long Positions Are Up By 40 Percent

Thursday, 07 June 2007 14:34:30 GMT  |  Antonio J F Sousa, Currency Analyst

 EURUSD – Long Positions Are Up By 40 Percent
 USDJPY –  Positioning Ratio Signals More Carry Trade Gains
 GBPUSD – Sterling Sentiment Flipped  to Net Short
 USDCHF – Positions Outstanding Rise By 8.7 Percent
 USDCAD – Contrarian Sentiment Calls for USDCAD at Parity

 

How to 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.

EURUSD - The ratio of long to short positions in the EURUSD stands at -1.19 as nearly 54% of traders are short. Yesterday, the ratio was at -1.50 as 60% of open positions were short. In detail, long positions are 14% higher than yesterday and 40% stronger since last week. Short positions are 11% lower than yesterday and 4% weaker since last week. Open interest is 1.1% weaker than yesterday and 9.7% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

GBPUSD - The ratio of long to short positions in the GBPUSD stands at -1.13 as nearly 53% of traders are short. Yesterday, the ratio was at -1.72 as 63% of open positions were short. In detail, long positions are 25.2% higher than yesterday and 4.5% stronger since last week. Short positions are 18.0% lower than yesterday and 3.8% stronger since last week. Open interest is 2.1% weaker than yesterday and 5.3% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

USDCHF - The ratio of long to short positions in the USDCHF stands at 2.67 as nearly 73% of traders are long. Yesterday, the ratio was at 3.37 as 77% of open positions were long. In detail, long positions are 11.9% lower than yesterday and 8.5% stronger since last week. Short positions are 11.4% higher than yesterday and 8.9% stronger since last week. Open interest is 6.5% weaker than yesterday and 2.0% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses

USDJPY - The ratio of long to short positions in the USDJPY stands at -1.39 as nearly 58% of traders are short. Yesterday, the ratio was at -1.12 as 53% of open positions were short. In detail, long positions are 12% lower than yesterday and 35.3% stronger since last week. Short positions are 8.7% higher than yesterday and 10.3% weaker since last week. Open interest is 1.1% weaker than yesterday and 9.3% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY gains.

USDCAD - The ratio of long to short positions in the USDCAD stands at 3.72 as nearly 79% of traders are long. Yesterday, the ratio was at 3.95 as 80% of open positions were long. In detail, long positions are 1.9% lower than yesterday and 5.5% weaker since last week. Short positions are 4.2% higher than yesterday and 29.2% stronger since last week. Open interest is 0.6% weaker than yesterday and 13.7% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

 

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