GBP/USD Ratio: 1.49 Signal: Bearish
GBPUSD – A steep 350 point-plus drop in GBPUSD over the past week has led speculative traders to flip in masse from a short-side bias to the long-side. From last week’s -1.49 reading, the SSI ratio now stands at 1.47 with nearly 60% of retail traders holding long positions. This shift in sentiment is no doubt rooted in the presence of very well-known support seen around 1.94. In responding to this technical level, the positioning gauge highlights a characteristic of the retail community – they trade ranges rather successfully. As such, an extreme sentiment reading will likely accompany the eventual breakout from the pound’s quickly closing congestion period. At current levels, the SSI bias is matching peaks going back to last 2007. Looking to the details of the report, trading has been active during the week’s decline. Longs were only 0.1% lower than yesterday but a significant 54.4% stronger on the week. On the other side of the market, short positions were 3.4% weaker than Wednesday but 27% fewer than last week. Overall, open interest rose 4.7% on the week and is a mere 0.2% above the monthly average.