**Twice a day SSI can be found on FXCMTR under Intraday Analytics
§ EUR/USD Speculative Positioning Grows Less Extreme
§ GBP/USD Open Orders grow by 32 percent
§ USD/JPY Net Positioning Flips to Short
§ USD/CHF Short orders up by 48 percent
§ USD/CAD Positioning Remains Net long
Historical Charts of Speculative Positioning:
EURUSD Speculative positioning has been growing less extreme and the ratio of longs to shorts is now -1.34 as 57% of the currently open positions are short. Today, long orders are 3.7% higher than yesterday and 10.7% stronger since last week. Short orders are 3.5% lower than yesterday and 7.6% weaker since last week. Open interest is 0.5% weaker than yesterday and 0.1% below its monthly average. Looking ahead, the SSI signals EURUSD strength. In fact, net positioning has remained mostly net short for the past month confirming the accuracy of the ratio as a contrarian indicator and coinciding with 300 pips appreciation in the currency pair.
GBPUSD Sterling positioning flipped to net short in October but has grown less net short in the past week. Today, the ratio of longs to shorts is -2.08 as 68% of the currently open orders are short. Long orders are 13.6% higher than yesterday and 45.4% stronger since last week. Short orders are 8.4% higher than yesterday and 26.3% stronger since last week. Open interest is 10.0% stronger than yesterday and 27.4% above its monthly average. Looking ahead, the SSI signals GBPUSD strength.
USDCHF - The ratio of longs to shorts is 3.81 as 79% of the currently open orders are long. Long orders are 2.4% higher than yesterday and 1.3% stronger since last week. Short orders are 2.9% higher than yesterday and 48.3% stronger since last week. Open interest is 2.5% stronger than yesterday and 4.3% above its monthly average. Looking ahead, the SSI signals USDCHF weakness.
USDJPY Yen speculative positioning flipped to net short and the ratio of longs to shorts currently stands at -1.26 as 55.0% of the currently open orders are short. Long orders are 1.1% higher than yesterday and 14.3% weaker since last week. Short orders are 4.7% higher than yesterday and 38.9% stronger since last week. Open interest is 3.1% stronger than yesterday and 21.8% above its monthly average. Looking ahead, the SSI signals USDJPY strength.
USDCAD - Speculative positioning has remained net long for most of the last two years coinciding with a 2400 pips loss in the currency pair which confirms precision of the indicator as a contrarian indicator. This week the ratio of longs to shorts is 1.52 as 60.4% of the currently open orders are long. Long orders are 2.3% higher than yesterday and 16.7% stronger since last week. Short orders are 0.9% lower than yesterday and 7.8% stronger since last week. Open interest is 1% stronger than yesterday and 12.2% above its monthly average. Looking ahead, the SSI signals USDCAD weakness.
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. If the EURUSD ratio is -3.00 short customer orders in the EURUSD exceed long orders by a ratio of 3 to 1. A negative number indicates that traders are net short while a positive number indicates that traders are net long. 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, higher the number of short orders in a bull market 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.
