British Pound Offers Range Trading
GBPUSD – Forex trading crowds turned fairly net-short the British Pound against the US Dollar as the pair rallied sharply towards its multi-month range highs. Yet a more recent moderation warns that the GBPUSD may fail at resistance and the sudden US Dollar reversal could take it lower. We most often use the SSI as a contrarian indicator. That is to say: if everyone’s short, we often go long.
In this instance we would wait for much stronger crowd selling pressure at GBPUSD range highs before calling for a topside breakout. In the absence of such a move, we have little choice but to say that the British Pound will keep within its range and trade lower.
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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