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SSI: USDJPY Ratio Warns of Trading Crowd Capitulation

SSI: USDJPY Ratio Warns of Trading Crowd Capitulation

2011-03-17 17:10:00
David Rodriguez, Head of Business Development
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FXCM Speculative Sentiment Index (SSI) Statistics:

SSI_Post_2ma_body_Picture_3.png, SSI: USDJPY Ratio Warns of Trading Crowd CapitulationSSI_Post_2ma_body_Picture_4.png, SSI: USDJPY Ratio Warns of Trading Crowd Capitulation

Currency Spotlight:

SSI_Post_2ma_body_Picture_5.png, SSI: USDJPY Ratio Warns of Trading Crowd Capitulation

USDJPY - Currency trading crowds have remained net-long the US Dollar against the Japanese Yen since the pair traded above the 90.00 mark. Extreme volatility has meant many traders have effectively given up on USDJPY-long positions. The ratio of long to short positions in the USDJPY stands at 4.68 as nearly 82% of traders are long. Yesterday, the ratio was at 9.27 as 90% of open positions were long. In detail, long positions are 38.3% lower than yesterday and 1.4% weaker since last week. Short positions are 22.3% higher than yesterday and 19.8% weaker since last week. Open interest is 32.4% weaker than yesterday and 10.8% below its monthly average. The strong capitulation suggests that the USDJPY could soon see a bounce, but it is difficult to advocate a long amidst such sharply downward momentum.

SSI Details:

EURUSD - Trading crowds have once again begun selling into Euro advances and buying into US Dollar declines, clouding short-term outlook in the extraordinarily volatile EURUSD pair. Last week we claimed that a strong build in EURUSD-long positions warned that trends could soon shift. Yet crowds have more recently remained strongly net-short and left the Euro uptrend intact. Elevated volatility expectations nonetheless warn that direction could change in an instant and caution is advised.

The ratio of long to short positions in the EURUSD stands at -2.11 as nearly 68% of traders are short. Yesterday, the ratio was at -2.35 as 70% of open positions were short. In detail, long positions are 2.7% higher than yesterday and 13.8% weaker since last week. Short positions are 7.7% lower than yesterday and 1.8% weaker since last week. Open interest is 4.6% weaker than yesterday and 10.2% below its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

GBPUSD - Forex trading crowds once again turned net-short the exceedingly choppy British Pound/US Dollar pair. The ratio of long to short positions in the GBPUSD stands at -1.68 as nearly 63% of traders are short. Yesterday, the ratio was at 1.51 as 60% of open positions were long. In detail, long positions are a substantial 49.8% lower than yesterday and 55.9% weaker since last week. Short positions are 27.6% higher than yesterday and 28.4% stronger since last week. Open interest is 18.9% weaker than yesterday and 14.0% below its monthly average. The SSI is a contrarian indicator and signals short-term gains. Yet extreme price choppiness warns that the GBPUSD could just as easily flip direction and continue its recent correction lower.

GBPJPY - Trading crowds remain heavily net-short the British Pound against the Japanese Yen, giving contrarian signal to watch for further rallies. The ratio of long to short positions in the GBPJPY stands at 1.77 as nearly 64% of traders are long. Yesterday, the ratio was at 7.00 as 88% of open positions were long. In detail, long positions are 48.1% lower than yesterday and 44.5% stronger since last week. Short positions are 105.8% higher than yesterday and 83.7% weaker since last week. Open interest is 28.8% weaker than yesterday and 58.3% below its monthly average.

USDJPY - Currency trading crowds have remained net-long the US Dollar against the Japanese Yen since the pair traded above the 90.00 mark. Extreme volatility has meant many traders have effectively given up on USDJPY-long positions. The ratio of long to short positions in the USDJPY stands at 4.68 as nearly 82% of traders are long. Yesterday, the ratio was at 9.27 as 90% of open positions were long. In detail, long positions are 38.3% lower than yesterday and 1.4% weaker since last week. Short positions are 22.3% higher than yesterday and 19.8% weaker since last week. Open interest is 32.4% weaker than yesterday and 10.8% below its monthly average. The strong capitulation suggests that the USDJPY could soon see a bounce, but it is difficult to advocate a long amidst such sharply downward momentum.

USDCHF - Crowds have remained net-long the US Dollar against the Swiss Franc since the pair traded near the 1.10 mark, giving consistent contrarian signal to stay short the fast-falling pair.The ratio of long to short positions in the USDCHF stands at 6.29 as nearly 86% of traders are long. Yesterday, the ratio was at 9.53 as 91% of open positions were long. In detail, long positions are 28.4% lower than yesterday and 0.9% weaker since last week. Short positions are 8.5% higher than yesterday and 25.3% weaker since last week. Open interest is 24.9% weaker than yesterday and 9.7% below its monthly average. Noteworthy capitulation in long positions warns that the USDCHF could soon bounce, but it is difficult to advocate a long position amidst such sharply bearish momentum.

USDCAD - Currency trading crowds have remained net-long the US Dollar against the Canadian Dollar since the pair traded near the 1.05 mark, giving consistent contrarian signal to stay short the USDCAD. Yet the most recent shift towards short positions and a pullback in long interest warns that momentum may slow and eventually reverse. The ratio of long to short positions in the USDCAD stands at 2.70 as nearly 73% of traders are long. Yesterday, the ratio was at 2.12 as 68% of open positions were long. In detail, long positions are 7.6% lower than yesterday and 51.9% weaker since last week. Short positions are 27.5% lower than yesterday and 13.6% weaker since last week. Open interest is 13.9% weaker than yesterday and 41.8% below its monthly average. The strong drop in long positions warns that the pair could soon continue higher.

AUDUSD - The ratio of long to short positions in the AUDUSD stands at -1.31 as nearly 57% of traders are short. Yesterday, the ratio was at -1.10 as 52% of open positions were short. In detail, long positions are 16.9% lower than yesterday and 28.7% weaker since last week. Short positions are 0.3% lower than yesterday and 26.8% weaker since last week. Open interest is 8.2% weaker than yesterday and 25.4% below its monthly average. The SSI is a contrarian indicator and signals more AUDUSD gains.

NZDUSD - The ratio of long to short positions in the NZDUSD stands at 3.95 as nearly 80% of traders are long. Yesterday, the ratio was at 2.99 as 75% of open positions were long. In detail, long positions are 6.1% higher than yesterday and 39.2% stronger since last week. Short positions are 19.7% lower than yesterday and 36.8% weaker since last week. Open interest is 0.4% weaker than yesterday and 28.1% above its monthly average. The SSI is a contrarian indicator and signals more NZDUSD losses.

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