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British Pound May Have Set Important Highs

David Rodriguez
ssi_gbp-usd_body_Picture_13.png, British Pound May Have Set Important Highs

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GBPUSD – Retail FX traders recently hit their most short GBPUSD on record, and a substantial swing in crowd sentiment warns that the GBP has set an important top.

Trade Implications – GBPUSD: FXCM SSI data showed that the ratio of open short positions to long positions in GBPUSD hit a remarkable 9.2 to 1 as it traded to multi-year highs. Yet long positions have since surged by 95 percent while short positions have fallen 20 percent.

Our purely sentiment-based Momentum2 trading strategy has done well buying into Sterling gains. Yet the sharp swing in positions means it is quite close to getting short. A daily key reversal likewise suggests the next move in GBPUSD will be lower.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

ssi_gbp-usd_body_Picture_7.png, British Pound May Have Set Important Highs

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