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
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