Bearish signal for USD/CHF from IG client sentiment data

The number of retail traders expecting USD/CHF to strengthen has increased over the past week, while the number expecting it to weaken has tumbled, sending a bearish signal.

Bearish signal for USD/CHF

The past week has seen an increase in the number of retail traders net long on USD/CHF and a sharp fall in those net short; a bearish signal for the currency pair.

This change in the positioning of traders using IG suggests the pair could drop below the CHf0.94 level for the first time since 11 June.

USD/CHF net short positions tumble

Positioning data from retail traders using IG show that almost three quarters of them are now net long for USD/CHF, with the ratio of traders long to short at almost three to one. The number of traders net long is nearly 11% higher than on Tuesday and 1.3% higher than last week, while the number of traders net short is more than 9% lower than on Tuesday and a remarkable 35% lower than last week.

At DailyFX, IG’s news and research website, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests the USD/CHF price may fall. Moreover, traders are further net long than on Tuesday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/CHF-bearish contrarian trading bias.

The bearish signal follows a period of relative stability for the USD/CHF pair and implies that it could now drop to the recent low at CHf93.76 touched on 11 June.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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