British Pound Expected to Weaken Further
Retail FX trading crowds are now their most aggressively long the British Pound against the US Dollar (ticker: USDOLLAR) since the GBPUSD broke to fresh lows in June, and such one-sided sentiment gives us contrarian signal that the pair may continue lower.
Our retail trader-based data shows that there are currently 2.1 open orders long for every one short, and the level of long interest has grown by a significant 20 percent since last week. We use the SSI as a contrarian indicator to price action, and indeed current readings support calls for further GBPUSD weakness.
Our GBPUSD technical forecast calls for a challenge of June lows near 1.5280 as the pair fails at key support.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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