Retail Traders Remain Long In Face of a 7% Drop in Price

GBP/USD: Retail Traders Remain Long In Face of a 7% Drop in Price

Net-Short Positions Decrease 8% Overnight

GBPUSD: Retail trader data shows 65.1% of traders are net-long with the ratio of traders long to short at 1.86 to 1. In fact, traders have remained net-long since Apr 20 when GBPUSD traded near 1.40333; price has moved 7.8% lower since then. The number of traders net-long is 4.9% lower than yesterday and 0.9% lower from last week, while the number of traders net-short is 8.0% lower than yesterday and 6.1% lower from last week.

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Decreasing Short Positions Suggest Prices May Slump Lower

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bearish contrarian trading bias.

— Written by Jake Schoenleb, DailyFX Research

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