The key to effective use of the SSI is your holding period. If you trade the daily chart in fx then SSI can be very helpful to your position vis a vie the big boys (Commercials). If you scalp trading hourly, 4 hr 6 hr 8 hr types well then the SSI will only "help" at the extreme edges of the market.

I wouldn't ever base a trade on SSI alone, but it can certainly help with confirmation of whatever system you use.

It appears a struck a nerve with the guts of the SSI. Let's see how the guts plays out as the week(s) progress. From today-

FXCM SSI: EURUSD Positioning Nears Parity

Tuesday, 12 June 2007 10:00:47 GMT
Written by David Rodriguez, Currency Analyst


EURUSD - The ratio of long to short positions in the EURUSD stands at 1.03 as nearly 51% of traders are long. Yesterday, the ratio was at -1.02 as 51% of open positions were short. In detail, long positions are 4.1% higher than yesterday and 44.3% stronger since last week. Short positions are 1.0% lower than yesterday and 28.7% weaker since last week. Open interest is 1.5% stronger than yesterday and 4.0% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses.

My interrpretation is Longs are buying here "buy the dip" Shorts are nervous. My system says my "hourlies" are mildly bullishess but 6hr in nice strong downtrend - Meeting up with monster long term daily EMA, looking for more basing action. Note- my system says very clearly that the 3318 low is not done it will revisit . 3369 3395 3436 3504 key R points.

GBPUSD - The ratio of long to short positions in the GBPUSD stands at 1.19 as nearly 54% of traders are long. Yesterday, the ratio was at 1.25 as 56% of open positions were long. In detail, long positions are 1.2% higher than yesterday and 41.3% stronger since last week. Short positions are 6.1% higher than yesterday and 32.1% weaker since last week. Open interest is 3.4% stronger than yesterday and 1.7% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.


Similar to Euro here though the "hourlies" much more bullish against strong 6Hr ADX down trend with monster EMA daily support. FWIW- Cable 9794 9782 should halt it in its track. Like Euro Cable isn't done but a correction higher appears in store. 9620 will be retested watch 9717 daily close 9780/9792 9894 key R values. If you aren't long already from 9690 area then I'd sit it out unless you want 2 try for those next 40 pips to the 9780/90 area watch what happens when it reaches that.

-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.