Swiss Franc Outlook Improves
Retail forex speculators remain short the US Dollar (ticker: USDOLLAR) against the Swiss Franc, but a more recent swing in positioning warns that the pace of USDCHF rallies may slow. There are 1.6 retail traders short for every long, and we would normally take this as clear contrarian signal that the USDCHF could continue to gain. Yet short interest has fallen 10 percent overnight while long positions are up 3 percent.
Our overall bias remains modestly bullish USDCHF, but the most recent swing in sentiment gives us pause on initiating fresh long positions. In fact our sentiment-based “Tidal Shift” strategy has recently taken a long position on the short-term swing in retail positioning.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to email@example.com; Contact David via Twitter at http://www.twitter.com/DRodriguezFX
Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.