New Lows for GBPUSD as Retail FX Takes Profit on Shorts
GBPUSD – Retail FX traders remain short the British Pound versus the US Dollar, but sentiment has eased away from a record extreme, suggesting that $1.6300 may yet again serve as a top for the GBPUSD.
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 GBPUSD crossed above $1.5200 in August 2012. We’ll need to see evidence of a turn before joining them – a continuing easing of sentiment will suffice.
--- Written by Christopher Vecchio, Currency Analyst for DailyFX.com
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