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While the SSI is available once a week on DailyFX.com, you can receive SSI readings twice a day in DailyFX Plus Forex Intraday Trading Signals

The SSI sought a EURUSD rally since 1.26 and was signaling a reversal around 1.60.  Find our more in the DailyFX Forex Forum
7-09-09SSI-01

Historical Charts of Speculative Forex Trading Positioning

7-09-09SSI-02

EURUSD – Extreme forex market choppiness has left sentiment on the Euro/US Dollar fairly neutral, and the SSI gives relatively few clues on near-term direction. The ratio of long to short positions in the EURUSD stands at -1.24 as a mere 55% of traders are short. Yesterday, the ratio was at 1.12 as 53% of open positions were long. In detail, long positions are 13.3% lower than yesterday and 21.3% weaker since last week. Short positions are 19.7% higher than yesterday and 11.7% stronger since last week. The noteworthy overnight gain in short positions gives us a modestly bullish contrarian bias, but we would prefer to wait for clear sentiment extremes before taking a firm stance on the EURUSD.

7-09-09SSI-03

GBPUSD –Forex positioning in the British Pound/US Dollar currency pair remains similarly indecisive, and our trading indicator gives relatively little sign of near-term direction. The ratio of long to short positions in the GBPUSD stands at -1.17 as nearly 54% of traders are short. Yesterday, the ratio was at 1.37 as 58% of open positions were long. In detail, long positions are 19.0% lower than yesterday and 15.2% weaker since last week. Short positions are 30.5% higher than yesterday and 4.0% stronger since last week. The sharp jump in short positions gives us a modestly bullish contrarian bias, and an SSI-based forex trading strategy has accordingly gone long the pair on the sharp shift in sentiment.

7-09-09SSI-04

USDJPY – Our forex sentiment indicator has aggressively called for USDJPY losses through recent trade, but the very recent shift in positioning has tempered its bearish forecast. The ratio of long to short positions in the USDJPY stands at 2.63 as nearly 72% of traders are long. Yesterday, the ratio was at an impressive 4.10 as 80% of open positions were long. In detail, long positions are 10.1% lower than yesterday and 17.5% stronger since last week. Short positions are 40.1% higher than yesterday and 8.4% weaker since last week. A headline SSI ratio of 2.63:1 gives us a contrarian bearish bias, but the overnight surge in short positions suggests that the pair may correct higher before resuming its downtrend. One of our forex trading strategies has accordingly taken profits on its earlier short position.

7-09-09SSI-05

USDCHF – One-sided forex trader sentiment suggests that the USDCHF will continue to decline, but a sharp drop in open interest gives us relatively little faith in said sentiment-based forecast. The ratio of long to short positions in the USDCHF stands at 2.10 as nearly 68% of traders are long. Yesterday, the ratio was at 1.65 as 62% of open positions were long. In detail, long positions are 3.4% higher than yesterday and 8.9% weaker since last week. Short positions are 19.0% lower than yesterday and 18.7% weaker since last week. Open interest is 5.1% weaker than yesterday and is considerably below recent peaks. Two of our SSI-based trading systems remain short the USDCHF, but our conviction in said bearish stance is limited on low open interest.

7-09-09SSI-06

USDCAD – A recent shift in USDCAD sentiment suggests that the pair may continue to correct lower through short-term trading. The ratio of long to short positions in the USDCAD stands at 1.14 as nearly 53% of traders are long. This is a noteworthy shift from yesterday when the ratio was at -1.16 as 54% of open positions were short. In detail, long positions are 10.1% higher than yesterday and 11.8% stronger since last week. Short positions are 16.7% lower than yesterday and 26.3% weaker since last week. The SSI is a contrarian indicator and maintains a modestly bearish bias on the USDCAD.


How do we interpret the SSI? Read our brand-new Primer on the SSI.

Follow up-to-the-minute updates on the SSI through DailyFX+ and our newest product: The Forex Stream

Have any further questions about the SSI and forex positioning data? Ask the author David Rodríguez on our forex forum.

We love getting feedback on our reports. Tell us how we’re doing: E-mail the author of this report at drodriguez@dailyfx.com.