GBPUSD – Retail forex traders remain aggressively long the British Pound against the US Dollar, and our sentiment-based trading strategies have mostly sold into GBPUSD weakness.
Trade Implications – GBPUSD: Our trend-following Momentum2 strategy has most recently gone long the GBP from $1.4918 on an early sign of a trend shift. Yet we can’t wholeheartedly advocate such a position if retail crowds remain aggressively bullish; our SSI shows that there are currently more than two traders short for every long. There is noticeable risk of further GBPUSD bounces, but we’ll need to see a larger push higher before switching tack.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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