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GBPUSD – An aggressive breakdown in the British Pound has been met with a sharp build in retail FX trader buying, and a contrarian view of crowd sentiment leaves us focused on further losses.
Trade Implications – GBPUSD: Our trader sample shows that GBPUSD long positions now outnumber short positions by more than 2 to 1—matching extremes seen through November and August breakdowns. Such heavily one-sided sentiment warns that the Sterling may be near an important turn, but such reversals and sentiment extremes are only clear in hindsight.
We will remain focused on British Pound selling opportunities until we see a substantial shift in crowd sentiment.
See next currency section: USDJPY - Japanese Yen Downtrend Intact, but Watch Next Moves
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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