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GBPUSD – Retail FX traders are their most short the British Pound since it traded to $1.63 in April of last year, and we think we’re near a major turning point in price.
Trade Implications – GBPUSD: As with the Euro, we believe that such one-sided sentiment favors a near-term GBPUSD top. Our sentiment-based trading strategies have done especially well buying GBP as crowds sell, and our Momentum2 could catch a major turning point if they suddenly go in the opposite direction.
The data itself shows the dangers of trying to time a major price reversal; crowds have been short since the GBP crossed above $1.52 in August. We’ll need to see evidence of a turn before joining them.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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