Source: FXCM Dealing desk

EURUSD - 70% of retail traders are short EURUSD (long to short ratio is -2.35). Moreover, since last week, retail has been aggressively selling EURUSD (short positions are up by 22.9%). In the past, when retail was short and selling more, the EURUSD has rallied in the following days. The SSI gives us a STRONG SIGNAL TO BUY EURUSD.


GBPUSD - 52% of retail traders are short GBPUSD (long to short ratio is -1.08). However, since last week, retail has been buying the GBPUSD (long positions are up by 7.9%). When retail is short but reduces its exposure, the long term direction remains bullish but the market might have some downside in the short term. The SSI gives us a MEDIUM SIGNAL TO BUY GBPUSD.

USDJPY - 63% of retail traders are long USDJPY (long to short ratio is 1.70). However, since last week, retail has been selling the USDJPY (short positions are up by 1.1%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a MEDIUM SIGNAL TO SELL USDJPY.

USDCHF - 75% of retail traders are long USDCHF (long to short ratio is 2.93). However, since last week, retail has been selling the USDCHF (short positions are up by 17.4%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a MEDIUM SIGNAL TO SELL USDCHF.

USDCAD - 84% of retail traders are long USDCAD (long to short ratio is 5.08). Moreover, since last week, retail has been aggressively buying USDCAD (long positions are up by 32.4%). In the past, when retail was long and buying more, the USDCAD has sold off in the following days. The SSI gives us a STRONG SIGNAL TO SELL USDCAD.

EURUSD - The ratio of long to short positions in the EURUSD stands at -2.13 as nearly 68% of traders are short. Yesterday, the ratio was at -2.45 as 71% of open positions were short. In detail, long positions are 13.1% higher than yesterday and 33.0% stronger since last week. Short positions are 1.6% lower than yesterday and 22.1% stronger since last week. Open interest is 2.7% stronger than yesterday and 13.8% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

<< Longs are getting emboldened short term and building pos'n here. Shorts are throwing in the towel intraday but are still trying to call the top with 22% stronger since last week. This tells me that bias Long but less momentum is showing up waning action with possible correction lower looming.>>

GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.05 as nearly 51% of traders are long. Yesterday, the ratio was at -1.36 as 58% of open positions were short. In detail, long positions are 29.2% higher than yesterday and 0.9% stronger since last week. Short positions are 9.3% lower than yesterday and 23.3% weaker since last week. Open interest is 7.0% stronger than yesterday and 17.2% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

<< Longs have nothing to worry about according to SSI 29% higher short term and not.9 longer out statistically insignificant. Shorts have no conviction 9% lower and 23 % weaker. From a contrarians view Get short Cable!!
Of course the call the news , etc whatever major technical damage occured into NY close yesterday and has continued today. Hard to try and sell here, looking to sell bounces>>

Euchre

Disclaimer Trading Currencies involves risk. Any opinion, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice.

Good stuff chaps. I'm never sure what sentiment is exactly in trading terms. From the SSI and the 'Guts' Report I get a distinct impression: What rises is to be sold and what falls is to be bought. What's you interpretation of trading sentiment?

Oh, I have an entirely different interpretation, Black.day.

At the risk of sounding corny and clichéd, what rises should be bought and sold higher. What falls should be sold and sold lower.

You'll see via SSI positioning that traders tend to leverage themselves too highly on a reversal of trend, when forex markets tend to trend for long periods of time.

EURUSD 1.38703 -2.23 31% Bullish
GBPUSD 2.00965 1.17 54% Bearish
USDJPY 114.612 1.72 63% Bearish
USDCHF 1.18705 2.79 74% Bearish
USDCAD 1.03067 4.92 83% Bearish

The ratio of long to short positions in the EURUSD stands at -2.23 as nearly 69% of traders are short. Yesterday, the ratio was at -2.45 as 71% of open positions were short. In detail, long positions are 8.3% higher than yesterday and 27.3% stronger since last week. Short positions are 1.5% lower than yesterday and 22.3% stronger since last week. Open interest is 1.3% stronger than yesterday and 12.4% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

Source: FXCM Dealing desk

If the majority are leaning in one direction go the other way. The reason I don't like the first # as much is when 1.7 say is the ratio and 55% are long well 45% are short so that isn't extreme- Its the "sentiment" the building of positions that tells me the "leanings" I like to see guts match to my potential Wave 3 sells/buys my system generates. Those are the juiciest.

FWIW- Cable gave it right at the NY close (not a time I trade.) Not to mention typically doesn't fall 150+ pips in that time frame. Let it go wait for next one.

Euchre

Flat for now made some pips on Euro but sloppy intraday for sure.


Disclaimer Trading Currencies involves risk. Any opinion, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice.

I'm new here. i want 2 know the importance of Speculative sentiment index and how it can be of help in trading the forex. Thanks.

What I asked was; What is trading sentiment? I can understand that trading sentiment is the levels of optimism or pessimism present in the market at anytime and in the instance of the SSI, this index will account for all the long and short positions on a particular pair in order to determine a bullish or bearish bias. The SSI is then said to work best in a contrarious way when a bias can demonstrated. But why is this the case? Couldn't one expect the majority of traders to be right?

I agree with you David. In fact, I'm very good at picking both tops and bottoms in the market. The trouble is that buying the top or selling the bottom is can be hideously painful.

Keep up the good work on the "Guts", Euchre!

Speculative Sentiment Index
Source: FXCM Dealing Desk

EURUSD - The ratio of long to short positions in the EURUSD stands at -2.46 as nearly 71% of traders are short. Yesterday, the ratio was at -2.45 as 71% of open positions were short. In detail, long positions are 4.0% lower than yesterday and 12.8% stronger since last week. Short positions are 3.7% lower than yesterday and 19.5% stronger since last week. Open interest is 3.8% weaker than yesterday and 7.0% 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 1.18 as nearly 54% of traders are long. Yesterday, the ratio was at -1.36 as 58% of open positions were short. In detail, long positions are 28.1% higher than yesterday and 0.1% stronger since last week. Short positions are 20.2% lower than yesterday and 32.5% weaker since last week. Open interest is 0.3% stronger than yesterday and 22.2% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.56 as nearly 61% of traders are long. Yesterday, the ratio was at 2.70 as 73% of open positions were long. In detail, long positions are 21.8% lower than yesterday and 5.1% weaker since last week. Short positions are 35.5% higher than yesterday and 25.9% stronger since last week. Open interest is 6.3% weaker than yesterday and 12.2% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 2.91 as nearly 74% of traders are long. Yesterday, the ratio was at 4.10 as 80% of open positions were long. In detail, long positions are 5.3% lower than yesterday and 22.9% weaker since last week. Short positions are 33.4% higher than yesterday and 7.8% stronger since last week. Open interest is 2.3% stronger than yesterday and 6.4% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

USDCAD - The ratio of long to short positions in the USDCAD stands at 4.98 as nearly 83% of traders are long. Yesterday, the ratio was at 5.09 as 84% of open positions were long. In detail, long positions are 1.0% higher than yesterday and 36.0% stronger since last week. Short positions are 3.3% higher than yesterday and 6.4% stronger since last week. Open interest is 1.4% stronger than yesterday and 24.4% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

The DailyFX COT report is up for the week: check it out here:

http://www.dailyfx.com/story/chartin...047043275.html



US Dollar Index: Implied speculative position deteriorated once again for the greenback, with the trend clearly towards selling the currency at multi-decade lows. Yet improving commercial interest may bring a recurrence of what we saw several months ago, with a peak to bring a US dollar bounce.

EUR: Euro net speculative positioning improved for the second consecutive week at 58,214. Given that this is significantly below previous peaks, the healthy net positioning leaves scope for continued EURUSD rallies. At 58.2k net non-commercial longs, it is actually in oversold territory as it relates to 2006 and 2007 speculative positioning. A test of 1.4000 seems likely from a speculative sentiment standpoint.

GBP: Pound positioning was improved as of September 11th, but this will clearly change in through upcoming data as the currency has fallen significantly from recent heights. This significantly decreases the significance of any interpretation of dated positioning numbers. That being said, the improvement in speculative longs from previously oversold conditions gave scope for continued GBPUSD gains. Such an outlook has clearly changed in light of recent price action.

CHF: Speculators have grown very bullish of the CHF (bearish the USDCHF), with positioning flipping to net long territory for the first time since 2006. Despite the bullish signal, the currency remains in strongly overbought territory through short term trade. Given Swiss commercial positioning at its most net short in a year, we are likely to see a USDCHF correction before fresh lows.

JPY: Similar to the CHF, Yen speculative positioning remains in extremely overbought territory through recent trade. Though the medium term remains towards JPY buying (USDJPY selling), overstretched Non-commercial positioning suggests a retracement is likely through short term trade. This is likewise confirmed by heavily net-short Commercial positioning, which is at its most negative since early 2006.

CAD: Speculators continued to press CAD long positions as the currency set fresh multi-decade highs against the greenback. Such overextended positioning leaves it susceptible to a near-term retrace, but we are reminded of the fact that speculative traders can remain overstretched for weeks at a time before worthwhile retracement. We remain cautiously bearish the CAD (bullish the USDCAD) given that Non-commercials are extremely long and Commercials are extremely short.

AUD: Speculative positioning is significantly improved, while Commercial net-longs have pulled back through recent trade. All in all the AUD remains in relatively oversold conditions against the USD, with continued gains in Non-commercial net longs leaving scope for continued rallies through the medium term. Though our stance is less bullish on the turn in Commercial positioning, we feel that risks remain to the upside through medium term AUD price action.

According to our dealing desk,

EURUSD 1.38631 -2.24 31% Bullish
GBPUSD 1.99373 1.24 55% Bearish
USDJPY 115.041 1.53 61% Bearish
USDCHF 1.18727 3.14 76% Bearish
USDCAD 1.02746 4.58 82% Bearish

EURUSD - The ratio of long to short positions in the EURUSD stands at -2.24 as nearly 69% of traders are short. Yesterday, the ratio was at -2.26 as 69% of open positions were short. In detail, long positions are 0.3% higher than yesterday and 27.5% stronger since last week. Short positions are 0.4% lower than yesterday and 4.2% weaker since last week. Open interest is 0.2% weaker than yesterday and 8.4% 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 1.24 as nearly 55% of traders are long. Yesterday, the ratio was at 1.18 as 54% of open positions were long. In detail, long positions are 5.6% higher than yesterday and 1.8% stronger since last week. Short positions are 1.1% higher than yesterday and 13.1% stronger since last week. Open interest is 3.6% stronger than yesterday and 14.9% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.53 as nearly 61% of traders are long. Yesterday, the ratio was at 1.56 as 61% of open positions were long. In detail, long positions are 2.2% higher than yesterday and 15.8% stronger since last week. Short positions are 3.9% higher than yesterday and 86.5% stronger since last week. Open interest is 2.9% stronger than yesterday and 19.3% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 3.14 as nearly 76% of traders are long. Yesterday, the ratio was at 2.91 as 74% of open positions were long. In detail, long positions are 0.7% higher than yesterday and 35.4% stronger since last week. Short positions are 6.6% lower than yesterday and 7.6% stronger since last week. Open interest is 1.1% weaker than yesterday and 1.7% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

USDCAD - The ratio of long to short positions in the USDCAD stands at 4.58 as nearly 82% of traders are long. Yesterday, the ratio was at 4.64 as 82% of open positions were long. In detail, long positions are 0.3% higher than yesterday and 9.1% stronger since last week. Short positions are 1.6% higher than yesterday and 21.1% stronger since last week. Open interest is 0.5% stronger than yesterday and 21.8% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

FXCM SSI: USDJPY Positioning Unchanged As Traders Await The FOMC's Decision
Tuesday, 18 September 2007 09:35:42 GMT
Written by John Kicklighter, Currency Analyst


EURUSD - The ratio of long to short positions in the EURUSD stands at -2.30 as nearly 70% of traders are short. Yesterday, the ratio was at -2.26 as 69% of open positions were short. In detail, long positions are 4.2% lower than yesterday and 21.8% stronger since last week. Short positions are 2.5% lower than yesterday and 6.2% weaker since last week. Open interest is 3.0% weaker than yesterday and 5.5% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

<<Ratio incr. on short pos'n was -1 range now -2. Longs positions are lower short term (sidelines with event risk looming) and longer out longs are just frothing over 1.40 on the euro with 21% stronger since last week. (This tells me that we are closer to a top). Shorts have no conviction lower 2% ah not much and 6% weaker since last week says, "Hey mkt I dont see downside after multi year high now sideways, I want to look elsewhere."
My bias is still higher on daily + chart but waning momentum is showing intraday making trades difficult over last week. For now, its all about event risk 18:15 gmt. >>

GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.18 as nearly 54% of traders are long. Yesterday, the ratio was at 1.18 as 54% of open positions were long. In detail, long positions are 2.6% higher than yesterday and 1.1% weaker since last week. Short positions are 2.8% higher than yesterday and 15.0% stronger since last week. Open interest is 2.7% stronger than yesterday and 15.6% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

<< Longs still think they should be long with event risk 2.6% higher but not much. Shorts now growing after move lower and building 2.8% ST and 15% farther out. Hmm does this tell us that downside is getting crowded and correction looming. Unsure dailies and higher are technically in bad shape so I am in sell any rally possible, however with FOMC, this trader is flat. Let the chart tell you what the next move is.>>

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.62 as nearly 62% of traders are long. Yesterday, the ratio was at 1.56 as 61% of open positions were long. In detail, long positions are 4.0% higher than yesterday and 17.9% stronger since last week. Short positions are 0.1% lower than yesterday and 79.4% stronger since last week. Open interest is 2.4% stronger than yesterday and 18.8% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

<<What is this 4% building of longs and 18% since last week, they are feeling recover???. Shorts sidelined with FOMC but wow building short base 79% stronger. That tells me that the path of least resistance is....... yep correct higher. ** Not my thoughts what I have heard cnbc and read. A lot of conflicting out there as many writing saying 25 bps says $ rallies against most. 50 bps says carry trades get crushed $ falls vis a vie yenny and rallies aGainst other EURopean Based currency Pairs. not surprising you should be. >>

I say not what they do is important, it's what they say is how fx , equities, bonds react.>>

Euchre
Disclaimer Trading Currencies involves risk. Any opinion, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice.

EURUSD - The ratio of long to short positions in the EURUSD stands at -2.28 as nearly 70% of traders are short. Yesterday, the ratio was at -2.26 as 69% of open positions were short. In detail, long positions are 4.3% lower than yesterday and 21.6% stronger since last week. Short positions are 3.2% lower than yesterday and 6.9% weaker since last week. Open interest is 3.6% weaker than yesterday and 5.0% 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 1.14 as nearly 53% of traders are long. Yesterday, the ratio was at 1.18 as 54% of open positions were long. In detail, long positions are 1.2% higher than yesterday and 2.5% weaker since last week. Short positions are 4.7% higher than yesterday and 17.1% stronger since last week. Open interest is 2.8% stronger than yesterday and 15.6% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.50 as nearly 60% of traders are long. Yesterday, the ratio was at 1.56 as 61% of open positions were long. In detail, long positions are 2.3% lower than yesterday and 10.7% stronger since last week. Short positions are 1.6% higher than yesterday and 82.4% stronger since last week. Open interest is 0.8% weaker than yesterday and 15.3% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 2.92 as nearly 74% of traders are long. Yesterday, the ratio was at 2.91 as 74% of open positions were long. In detail, long positions are 2.5% lower than yesterday and 31.0% stronger since last week. Short positions are 2.5% lower than yesterday and 12.2% stronger since last week. Open interest is 2.5% weaker than yesterday and 3.0% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

USDCAD - The ratio of long to short positions in the USDCAD stands at 4.90 as nearly 83% of traders are long. Yesterday, the ratio was at 4.64 as 82% of open positions were long. In detail, long positions are 3.0% higher than yesterday and 12.0% stronger since last week. Short positions are 2.4% lower than yesterday and 16.4% stronger since last week. Open interest is 2.1% stronger than yesterday and 23.6% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.