Retail Positioning - The Ultimate Contrarian Indicator

RPM Update

USDCHF: 2:1 2 buyers for every 1 seller, this has declined from an earlier reading today of 2.26. I am watching the UsdChf carefully for this ratio to increase as price moves to new lows.
EURUSD: 1:1 This ratio is flat. There are an even number of buyers and seller.
AUDUSD: 1:1 The big mover for the day. This ratio has gone down today from 1.3 as retail traders have taken profits as the price has moved up.
GBPUSD: 1.18:1 Overall choppy price action. No significant support / resistance levels have inspired traders to increase their positioning at this time.
 
AU Retail Sales 8:30 pm EST and Retail Positioning

Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.

Forecast: .3

A negative deviation of .9 should move the market -40 to -70 pips
A positive deviatioin of 1.1 should move the market +40 to 70 pips

A negative deviation of .5 should move the market -30 to -50 pips
A positive deviatioin of .5 should move the market +30 to 50 pips

A 100% retracement is common in the following 3 hours. If no conflicts this entry should be good for 60-150 pips.

Retal positioning stands at -1.1 as there are 1.1 sellers for every 1 buyer. This ratio has gone down from 1.28 as traders have taken profits after the 400 pip move from march 26th. For live retail positioning information - see additional charts here.

The retail positioning ratio signifies that if there is a + deviation > .9 and price breaks .9215 sell stops will be hit and price will continue higher.
 
US ISM Manufacturing PMI fcst 57

The Institute of Supply Management (ISM) Manufacturing Index measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories.
Forecast: 57

UsdJpy should react in the most predictable manner.

A negative deviation of 3.4 should move the market -40 to -90 pips
A positive deviation of 2.4 should move the market +30 to 50 pips

A negative deviation of 3.4 should move the market -40 to -90 pips
A positive deviation of 2.4 should move the market +30 to 50 pips

A 50% retracement is common in the following 3 hours. If no conflicts this entry should be good for 100% of the initial reaction.

Retail positioning stands at 1.1 as there are 1.1 buyers for every 1 seller. For live retail positioning information - click here.

The retail positioning ratio signifies that if there is a - deviation > -3.4 and price breaks 92.7 stops will be hit and price will continue lower.
 
US NonFarm Payroll & RPM

Measures the change in number of employed people during the previous month, excluding the farming industry.

Forecast: 185

UsdJpy should react in the most predictable manner.

Unemployment rate deviation of > .2 should also be watched along side of NFP.

NFP:
A +- deviation of 50 should move the market -60 to -120 pips
A +- deviation of 90 should move the market +60 to 120 pips

The market has been very sensitive to this number as of lately. In the last 5 years this has been the number to watch. One of my least fav. economic releases because of its mainstream popularity.

If there is a conflict between the NFP and umeployement watch for a quick spike and restracement in the UsdJpy.

Retail positioning stands at 1.1 as there are 1.1 buyers for every 1 seller. For live retail positioning information - click here.

The retail positioning ratio signifies that if there is a - deviation > -50 and price breaks 92.7 stops will be hit and price will continue lower.
 
UsdCad nearing Stopout Zone

RPM shows traders have been adding to long UsdCad positions while price is falling. Stops likely rest below the low of April 1st. If stops are triggered at this level, price will fall quickly. Live RPM buy/sell ratio charts avail here. SSI DailyFx positioning agrees.

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AUD Interest Rate Decision

The AUD Interest Rate Decision contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions.

Forecast: .25 hike to 4.25%

A negative deviation of .25 (no hike) should move the market -45 to -90 pips
A positive deviation of .25 (.5 hike) should move the market +45 to 90 pips

There has been chatter of no hike due to deteriorating market conditions in Australia. Therefore, a 0 deviation or .25 hike as expected may create an initial spike.

Retracements are not common, unless there is an accompanying statment following the interest rate decision that conflicts with the release deviation.

Retail positioning stands at -1.1 as there are 1.1 sellers for every 1 buyer. For live retail positioning information - click here.

The retail positioning ratio signifies a nearly equal number of buyers to sellers and a positive or negative deviation will have the same effect.
 
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UsdCad Update

The UsdCad did trigger stops and continue down below 1.0060. The position is up 40 pips. Traders continue to add to long positions as price makes new lows.

RPM has hit 2.1 as there are 2.1 buyers for every 1 seller. New buyers likely placed stops below 1.0000. A break of that level should trigger additional downside movement as stops are taken out.

To view live RPM charts click here.

To learn more about the RPM indicator and how to use it in your trading click here.

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EurUsd & The Herd Indicator aka RPM

The current RPM is 1.18. This indicates there are 1.18 buyers for every seller.

RPM – Ratio of buyers/sellers indicator, shows that traders are attempting to pick bottoms on the EurUsd as price breaks new lows.

Although this is not a high ratio, the change in the trend is significant.

You can see in the chart below that the EurUsd is making new lows.

The RPM (also known as the herd indicator) has gone from showing a net sell position on April 5th to a net long as traders add to their long positions trying to pick bottoms.

Live herding charts avail here.

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UsdCad Update – Buying @ parity?

UsdCad update summary: Traders continue to pick bottoms by opening new positions. Traders as a group are not however, adding to losing long positions.

When the RPM is increasing it signifies that the ratio of buyers to sellers is increasing, most likely because traders are adding to long positions. When the RPM ratio is flat it signifies that the ratio of buyers/seller is also flat.

In this case, a leveling out of the RPM indicator most likely signifies that traders are going long at bottoms, placing stops close to entries, being stopped out as price goes lower, and re-entering at new lows. This would not affect the buyer/seller ratio and make the RPM flat.

Stops still expected lower and where there are stops, there are profits for bigger players.

Live RPM chartshere.

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UK Services PMI Fcst 58

The Chartered Institute of Purchasing and Supply (CIPS) Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories.

Forecast: 58.2

A positive deviation of 2.4 should move the GBPUSD +20 to 50 pips

A negative deviation of 2.4 should move the GBPUSD -20 to 50 pips

A 100% retracement is common in the following 3 hours. This entry should be good for 100% of the initial reaction.

Retail positioning stands at -1.5 as there are 1.5 sellers for every 1 buyer. For live retail positioning information - click here.

The retail positioning ratio signifies that if there is a + deviation > 2.4 and price breaks 1.5290 stops will be hit and price will continue higher.

To get this and future RPM News updates sent to your email, join our RPMFx News Group here.
 
AudUsd – beginning downtrend?

The AudUsd has been bought heavily in the Asian and UK sessions.

If price breaks .9240 stops should be triggered and the price should continue much lower.
The Herd meter (RPM) has gone from 1 to 1.57, showing there are now 1.57 buyers for every seller. These latest buyers will most likely have stops resting below .9245

Fundamental Support?
TimesOnline - http://bit.ly/aVqGOv

“Copper traders spooked by stockpiles
Predictions of a price collapse imply that the Chinese will suddenly stop wanting homes with fridges and air conditioning units.”

Watch copper prices as well for confirmation of downward trend in AUD.

Live herding charts. http://rpmfx.blogspot.com/2010/03/advanced-live-charts.htm

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CAD Employment 7am est

Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation's currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

Fcst 25.2

A positive deviation is good for the CAD, thus price negative for the UsdCad.

A deviation of 60 should move the market 40 to 80 pips
A deviation of 30 should move the market 35 to 50 pips

A 78% retracement is common in the following 3 hours. Based on retail positioning, I would only expect a retracement on a negative deviation.

Retail positioning stands at 1.9 signifying there are 1.9 buyers for every 1 seller. For live retail positioning information - click here.

The retail positioning ratio signifies that if there is a + deviation > 60 and price breaks .9960 stops will be hit and price will continue lower.

Warning: The UsdCad is a lightly traded instrument, which can result in large spreads > 15 pips during news releases.
 
NZD Retail Sales 6:45pm est

Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises. Core Retail Sales excludes gasoline, auto dealers and workshops.
Forecast: Core .4

A deviation of 1 should move the market 30 to 60 pips

A 78% retracement is common in the following 15 minutes. If no conflicts this entry should be good for 78% of the initial reaction.

Retail positioning stands at 1.1 as there are 1.1 buyers for every 1 seller.

The retail positioning ratio signifies that if there is a - deviation > 1 and price breaks .7019 stops will be hit and price will continue lower.

Warning: Due to low liquidity at the time of this release spreads can be > 15 pips on interbank platforms

Side Note: There is a golden cross (crossing of 50 ma and 200 ma) imminent on NzdUsd and near on AudUsd

Live news setups email to you here.
 
UK CPI 4:30 am est

The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down.
Y/Y Forecast: 3.1

A deviation of .3 should move the market 20 to 30 pips
A deviation of .5 should move the market 30 to 50 pips

A 50% retracement is common in the following 30 minutes. If no conflicts this entry should be good for 100% of the initial reaction.

Retail positioning stands at -1.1 as there are 1.1 sellers for every 1 buyer.

This is a relatively flat level and represents no immediate opportunity.
 
Consumer Confidence 10:00 am EST

Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.

Forecast: 53.5

A deviation of 6 should move the UsdJpy 20 to 35 pips
A deviation of 12 should move the UsdJpy 35 to 65 pips

A 50% retracement is common in the following 3 hours. If no conflicts this entry should be good for 100% of the initial reaction.

Retail positioning for the UsdJpy stands at 1.7 as there are 1.7 buyers for every 1 seller. There is more potential for a move down given this positioning.
 
US GDP 8:30am est

The U.S. Gross Domestic Product (GDP) measures the total value of all goods and services producedby the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy.

The Advance release is the earliest and thus tends to have the most impact.

The annualized Q/Q forecast is 3.4%
A deviation of 0.5 should move the market 20 to 40 pips
A deviation of 0.8 should move the market 40 to 90 pips

A 50%-100% retracement is common anywhere from 5minutes to 1-2 hours after the release and in the last 6 months has been very risky to trade the bounce for anything more than 10-20 pips.

The retail positioning (RPM) ratio on USDJPY is at 1.7 showing there are 1.7 buyers for every seller. The RPM is a contrarian indicator. There is some downside risk on a negative deviation.

This has been fairly consistent level throughout this week.

For live retail positioning information click here.
For 60 Second video on how to trade Retail Positioning click here.
To get news alerts by email click here.
 
US ISM Manu 10:00am est

The Institute of Supply Management (ISM) Manufacturing Index measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. The UsdJpy should be the benefactor of a + deviation.

Consensus 60

A deviation of 3.8 should move the market 40 to 90 pips
A deviation of 2.8 should move the market 30 to 50 pips

A 100% retracement is possible in the following 1 hour. If no conflicts this entry should be good for 100% of the initial reaction.

Retail positioning stands at 1.6 as there are 1.6 buyers for every 1 seller.

The retail positioning ratio signifies that if there is a - deviation > 3.4 and price breaks 93.70 stops will be hit and price will continue lower. Retail positioning has been fairly steady in the last week.
 
UK PMI MFG m/m 4:28 am est

The Chartered Institute of Purchasing and Supply (CIPS) Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

Forecast 57.5

A deviation of 4 should move the market 30 to 50 pips
A deviation of 3 should move the market 20 to 30 pips

A 100% retracement is common. However there is no pattern in the after spikes.

Retail positioning is flat.

Article Links: here
Manufacturing gauge expands rapidly in April (sfgate.com)
UK manufacturing confidence at 15-year high (newstatesman.com)
Survey: China Manufacturing Accelerated in April (abcnews.go.com)
 
US PENDING HOME SALES 10:00 AM est

National Association of Realtors homes in escrow per current period.
Excludes new homes.

This report has been very unpredictable. A trade in the opposite direction of the initial spike could be a good play as stops are hit that entered with the news.

Pending Home Sales is not as important as New Home Sales.

When a new home is built and put on the market it represents new jobs and materials purchased that went into the construction of the new home.

An existing home changing hands from owner to owner only puts money in the realtors pocket.

Retail Positioning on the UsdJpy stands at 1.36. This is not a high level and retail traders as a group are not fighting the trend. I will be watching this closely as the UsdJpy approaches 95. If retailers come in to sell, then I will look for a breakout higher.


Retail Position charts are here.

Articles here
* New Home Sales Fall to Record Low in February (dailyfinance.com)
* New-home sales surge in March (bendbulletin.com)
* No Upturn for Building Materials Suppliers (online.wsj.com)
 
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