Sentiment in GBPJPY at an All-Time High

Daily FX
Sentiment in GBPJPY at an All-Time High
Tuesday October 19, 5:53 pm ET
By Jeremy Wagner DailyFX Speculative Sentiment Index (SSI) reached an all time record high today at +15, showing that 15 times as many retail accounts at FXCM are long the pair versus short. This is a powerfully bearish signal. DailyFX Speculative Sentiment Index (SSI) reached an all time record high today at +15. The SSI tracks how many retail traders at FXCM are long the pair versus short. A reading of +15 means there are 15 times as many traders who think the price is going to move up versus those who are short. SSI can be a valuable tool for clients when traders are lining up and trading against the direction of the daily trend. Even though prices are below where the Bank of Japan intervened a couple weeks back, traders may be anticipating another round of intervention by going long the GBPJPY. Central Bank intervention by its very nature is counter-trend (because they intervene when the market is moving against their preferred direction). This afternoon the GBPJPY SSI reached +15.00 for the first since records were kept as 93% of traders were long the cross and fighting this downward trend. How can all these traders being long be bearish? They all think the price is going to go up. It seems counter-intuitive, but consider two things. First, all of these traders are already long, so they have already bought in the past, even while the price continued to drop during today’s trading. This makes them unlikely to buy more later to push the currency pair higher. Furthermore, all these traders eventually need to sell to get out of their trades. You can almost look at the SSI as an indicator of orders to come in the future. Every long position is someone waiting to sell. When this chart was made this afternoon, there were 15 times more long accounts than shorts – that means there were 15 times as many people looking to sell then looking to buy. So what’s going on with the SSI now? The SSI is released twice daily inside DailyFX+ which is available free to all live account holders of FXCM. To learn more about how to use this powerful indicator in your trading, visit the DailyFX+ Trading Course where the instructors share three strategies on entering a trade using this proprietary indicator. Sign into the course to learn more about SSI, how to trade using it, and the areas to enter/exit. You will find the SSI topic on the left hand side of the video player. Visit DailyFX PLUS Today Additionally, this Friday morning in the course webinar room, Matt Russell will hold a live session talking about current trading opportunities that may be setting up using SSI. You can find Matt broadcasting in the course live at 5am ET on Friday. Access the webinar room in the upper left hand corner of the video player.

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