Monday, July 27, 2009

GBP Forecast Turns Bullish on Major Shift in Forex Positioning


EURUSD Euro Forecast Remains Neutral on Balanced Forex Positioning
USDJPY Forex Traders Remain Heavily Long the USD/JPY – Losses Likely
GBPUSDBritish Pound Forecasts Turned Bullish on Shift in Sentiment
USDCHF Forex Sentiment Gives Little US Dollar/Swiss Franc Bias
USDCAD – Canadian Dollar Forecast Unclear Against US Dollar

The SSI sought a EURUSD rally since 1.26 and was signaling a reversal around 1.60.

GBP Forecast Turns Bullish on Major Shift in Forex Positioning
Historical Charts of Speculative Forex Trading Positioning

GBP Forecast Turns Bullish on Major Shift in Forex Positioning

EURUSDOur forex sentiment-based forecast for the Euro/US Dollar has remained relatively neutral, as trading crowds remain effectively balanced in their positioning on the pair. The ratio of long to short positions in the EURUSD stands at 1.00 as an equal number of traders are long and short the EUR/USD. This has remained unchanged since yesterday, but we do note that longpositions have grown an impressive 24.2 percent since last week. Increasingly EUR/USD-bullish crowd sentiment gives us a modestly bearish contrarian trading bias, but positioning is nowhere near extreme enough to make a forceful prediction. Our sentiment-based forex trading signals are accordingly flat the Euro/US dollar through current price action.

GBP Forecast Turns Bullish on Major Shift in Forex Positioning

USDJPYOur contrarian forex trading strategies continue to sell the US Dollar/Japanese Yencurrency pair, as forex trading crowds remain very bullish the USD/JPY. The ratio of long to shortpositions in the USDJPY stands at 1.54 as nearly 61% of traders are long. Yesterday, the ratio was at 1.67 as 63% of open positions were long. In detail, long positions are 4.0% higher than yesterday and 13.5% stronger since last week. Short positions are 13.2% higher than yesterday and 10.0% weaker since last week. Open interest is 7.5% stronger than yesterday and 36.5% below its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses. Yet a modest pullback in longs weakens the strength of our forecast.

GBP Forecast Turns Bullish on Major Shift in Forex Positioning

GBPUSDOur forex trading strategies recently bought the British Pound against the US Dollar, as a sharp shift in forex sentiment signaled that further gains were likely. The ratio of long to shortpositions in the GBPUSD stands at -1.04 as nearly 51% of traders are short. A net-short bias is a sharp departure from last week, when the majority of traders were aggressively long the pair. Indeed,GBP/USD short positions are 25.2 percent higher overnight and a massive 76.7 percent above levels seen last week. Our SSI is a contrarian indicator, and the sharp drive towards GBP/USD shortpositions signals that further gains are likely.

GBP Forecast Turns Bullish on Major Shift in Forex Positioning

USDCHFOur sentiment-based bias on the USD/CHF remains relatively neutral, as traders sentiment does not point to gains or losses and open interest is well-below its medium-termaverage. The ratio of long to short positions in the USDCHF stands at 1.07 as nearly 52% of traders are long. Yesterday, the ratio was at 1.08 as 52% of open positions were long. In detail, longpositions are 18.3% higher than yesterday and 6.5% stronger since last week. Short positions are 19.3% higher than yesterday and 2.8% stronger since last week. Open interest is 18.8% stronger than yesterday and 28.3% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

GBP Forecast Turns Bullish on Major Shift in Forex Positioning

USDCAD – The ratio of long to short positions in the USDCAD stands at 1.07 as nearly 52% of traders are long. Yesterday, the ratio was at 1.09 as 52% of open positions were long. In detail, longpositions are 3.1% higher than yesterday and 16.1% stronger since last week. Short positions are 5.2% higher than yesterday and 17.1% stronger since last week. Open interest is 4.1% stronger than yesterday and 40.4% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses, but the heavily below-average open interest gives us little faith in these forecasts.

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