Trade FOREX with FXCM

  • Award-Winning Platform
  • 24/7 Customer Support
  • Trade Directly on Charts
  • Free $50K Practice Account

Resources

British Pound at Potential Sentiment Extreme

By , Quantitative Strategist
26 January 2012 17:33 GMT
ssi_gbp-usd_body_Picture_14.png, British Pound at Potential Sentiment Extreme

GBPUSD – Forex trading crowds have turned aggressively short the British Pound against the US Dollar since it traded above $1.5400, giving us consistent contrarian signal that the GBPUSD may in fact continue onto fresh highs.

The SSI ratio stands at -3.69 as nearly 79% of traders are short. This is a substantial shift from yesterday, as the number of traders short jumped 58.6% overnight and 60.7% above levels seen last week. In absolute terms, the number of traders short is at its highest since the pair set an important short-term top at just about the $1.5700 mark and even at $1.65 during the summer.

Does such one-sided sentiment point to a short-term top? Perhaps, but the short-term trend favors gains until we see real signs of reversal.

How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

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

To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to drodriguez@dailyfx.com

Contact David via Twitter at http://www.twitter.com/DRodriguezFX

provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from

26 January 2012 17:33 GMT