GBP/USD Real-time Sentiment

Gotta go now, but they're all ex Reuters/Thomson FX folks and bank traders (about four of them, and they comment in relays for each market ROUND THE CLOCK; they specialize in Asia, London, NY etc.).

Other very good sources of course:

http://www.bloomberg.com/news/markets/currencies.html

http://www.ft.com/markets/currencies

My first post and I am glad to see your work mate..I subscribe to your thread.

Sweet! Once I get some free time away from school I'll figure out how to implement them and add it in.

Thanks again!

wow I'm totally holding my long... I still don't know what to expect when the price turns around. I find the periods of stalling to be interesting. It looks like even if you were late in jumping in, that could be another point you could do so provided that the sentiment trend continues? I dunno, but it seems like you could follow the sentiment trend after periods of stall... look at the 2HR mark and the 28HR mark. It also looks like after long periods of stall is where reversals could take place. Maybe it's also when you could take profit.

it looks like the slopes don't go beyond a certain point... I wonder if you could then calculate approximately when reversals could potentially occur.

I just noticed we've entered into a flat sentiment as I was talking about earlier... we could see a reversal time to take profit

looks like we'll see a drop if not a reversal at least... flat sentiment turned downward

interesting... it just went back to being flat at its previous level

Interesting MO. Good job but I have one suggestion. I think it would be more “eye appealing” if those balls were made smaller. Maybe just a little bigger than the connecting line but in a slightly darker or lighter color than the line itself.

Just thinking out loud.

JD

Thanks! Well I made them smaller

Are you long from circa 1.6113 to 1.6300, LOL!

Maybe looks toppy right now based on text/media sentiment. A negative news surprise could puncture this balloon if everyone is already long (re a rush to the exits by the herd). But it doesn't look like everyone is long, according to following....

http://www.dailyfx.com/dailyfxplus/i...rts_Surge.html

Actual positioning in GU looks short by the majority. Usually, when this happens it signals strong upside, as they will get blown out of the water on repeated stop running at the top.

Hard to figure out reversal criteria based on the sentiment line. Maybe if you can get the data into Excel, you could plot a moving average of the sentiment line.

I see from bookstore today, How I Became A Quant, by Lindsey, that quants have been doing text recognition for quite a few years (think there are apps that troll the web per stock now, etc., and quantify it).

lol yeah I'm definitely a Quant (if you haven't seen my FF profile). I think the way I'm handling it though is different compared to them.

Also yeah it might be hard to determine reversals, but it could be really easy too! We just haven't seen a reversal played out yet with this thing to know what to look for yet. I opened a test long when the sentiment crossed up lol which was around 1.6115 and I closed it when Sentiment flattened earlier today around 1.6280.

Correction: your sentiment indi. now, LOL, looks very bullish, when all positioning data show folks heavily short (fuel for the fire up) and when GU price indis etc. are screaming overbought.

GU only at 38% fib retrace of 4 hour primary trend down move (check 4hr charts). Maybe your indi/take on sentiment can drive GU to 50-62% fib. (a more reasonable target maybe than 38%).

Fuel for fire = short stops at highs. Maybe to be forced liquidation as opportunist hedge funds, say, run the stops at the top.

Interesting experiment here....

Phenomenal stuff here MF - I tried to convince one a technical partner to develop this some months ago but their eyes kind of glazed over.
I'll be following this very closely. I've done something very similar but using open retail positioning as a guide to sentiment, which I've now nearly gathered a year's worth of data for.
I have seem similar experiments done by Oxford/Cambridge (can't remember which), but for volatility modelling - a multi-million pound project sponsored by investment banks unsurprisingly.

Have you weighted sources at all? One of the things that could damage any predictability is including too many sources who are knowledgeable. From my experience you have:
- joe public: completely clueless
- joe public with a vested interest: perfect contrarian indicator
- analysts: 50/50
- successful traders: well hidden but perfect indicators

I would have thought adding too many specialists would dilute your second group who I'm guessing is behind the majority of your inputs?

Either way, sterling work. I'll keep a close eye.

MoForce's sentiment readings seem positively correlated with price, even leading it roughly. Not a contrary indicator, so far. Hence, I recommended knowledgeable/quality sources for his metric (re FT, Bloomberg, Forexlive.com).

Yes, there's the real risk of diluting what he has working now (re "If it ain't broke, don't fix it"). Like adding more than the original handful of variables to a sys).

Intriguing as his metric runs contrary to all positioning data in GU now. Nice divergence. His metric wouldn't add useful info content if it were correlated with positioning data.

**But problem here with GU right now is that, as far as I can tell, a lot of very smart traders are scaling in short here at local resistance (and sentiment data show this now).

Fascinating exercise in price/value discovery here....

Ah, I couldn't quite see the graphic on this tiny screen, so I assumed it to be contrarian. I agree you shouldn't confuse it by adding positioning data, you need clean inputs at this stage.

Another useful divergence might be against ongoing risk reversals. Time will tell...

Thanks for the help and info guys! I think I'll let it be for a while then. I'm really interested to see what happens when price makes an actual turnaround.

What I could do is create two different charts... this one and another which also includes other sources to compare

Maybe when thinking about interpreting the Sentiment we should apply Occam's Razor.

Sentiment is well above 0 with an overall positive slope. Overall, people think GU will go up.

although price continued to fall Sentiment keeps rising... GU should go up. Now would be a great time to buy =P

I left it running to see what happens if I leave it up when markets are closed and OMG! There was a HUGE spike up in sentiment. Did some kind of news come out or something?