Thursday, 2 February 2012

EURO/U.S.D and G.B.P/U.S.D SSI: The Speculative Sentiment Index

Symbol LastWeek Present %Long Change:
Open Interest
Signals Chart Links

Fresh Euro Highs Favored on Sentiment

ssi_eur-usd_body_Picture_7.png, Fresh Euro Highs Favored on Sentiment
Trading crowds turned aggressively short the Euro against the US Dollar as the pair broke above 1.2700, and fairly consistent selling suggests that the EURUSD could yet trade to further highs. 
The pair has recently consolidated and has yet to break convincingly above the psychologically significant $1.3200 mark. Yet the trend favors further short-term gains and trading crowd sentiment leaves us in favor of further highs.
Our SSI ratio of long to short positions in the EURUSD stands at -1.67 as nearly 63% of traders are short. Although past performance is no guarantee of future results, such one-sided extremes can often come at major turning points.
Near-term resistance remains at recent multi-month peaks of $1.3220, while support is at 2/1 lows of $1.3025. The next move may be pivotal, and we expect that a break to further highs remains more likely.
How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

British Pound Targets Peaks

ssi_gbp-usd_body_Picture_17.png, British Pound Targets Peaks
Forex trading crowds have turned aggressively short the British Pound against the US Dollar since it traded above $1.5400, giving us consistent contrarian signal that the GBP/USD may in fact continue onto fresh highs.
Our SSI ratio of long to short positions in the GBP/USD stands at -2.37 as nearly 70% of traders are short. It is worth noting that short interest is down an important 38% since last week, while long interest fell a lesser 11% through the same stretch. 
The significant week-over-week slowdown in selling warns that the pace of gains may slow.
Yet trading crowds remain aggressively net-short, and we see few signs of imminent reversal. Our bias remains bullish until further notice.

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