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GBPUSD – Retail forex trading crowds remain short the British Pound versus the US Dollar, but a material shift in sentiment warns that both sentiment and price may have hit an important extreme.
Trade Implications – GBPUSD: We typically go against the crowd; if everyone’s short we prefer to be long and vice versa. Yet retail traders are often most short at the top, and the fact that the net position was at a record short as Cable traded into highs warns of a potential GBPUSD turnaround.
Two weeks ago we highlighted a weekly key reversal in the Sterling which coincided with a material shift in crowd positions. A break below $1.6580 would further confirm that Cable has set a lasting top.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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