GBP/USD Ratio: 1.31 Signal: Bearish
GBPUSD – The ratio of long to short positions in the GBPUSD stands at 1.31 as nearly 57% of traders are long. Moreover, since last week, retail has been aggressively buying GBPUSD (long positions are up by 18.9%). In the past, when retail was long and buying more, the GBPUSD has sold off in the following days. In fact, more long positions don't necessary suggest more confidence in the direction of the current trend. In general, when traders start having adverse movements against their position, many tend to increase the size of their position with the purpose to average down their entry price in one last attempt to recover from previous losses. However, the higher the number of long orders in a bear market the more dangerous is to take additional long positions because many of those traders who just entered the markets are also leaving their protective stop losses just below the current price action.