British Pound: USD/GBP (GBP=X) Economic Calendar is Relatively Light This Week
The pound to dollar exchange rate scaled above the 1.2500 handle yesterday for the first time in a month. From a technical perspective, the pair looks to be signaling a bullish continuation.
However, if there is one thing that stands out about recent price action it’s the lack of volatility. This is seen across most of the currency pairs that just a few weeks ago showed out sized weekly price swings on the back of the Coronavirus escalation.
GBP/USD, in particular, has rallied for six days straight although the upward momentum is very similar in terms of momentum to the correction that took place around the turn of the month. This typically suggests that there is not a lot of strength behind the move.
The US Dollar Index (DXY) is Diverging
Aside from the lack of momentum, the US dollar index is not confirming the move in GBP/USD. While the currency pair has rallied above the high set in late March, the dollar index continues to hold above the equivalent low.
The upside break in GBP/USD would be a lot more convincing if DXY traded close to last week’s open near 98.30.
The price action seems to suggest that the move in the exchange rate has more to do with a stronger British pound than it has to do with a weaker dollar.
The Economic Calendar is Relatively Light This Week
A breakout often requires some form of a catalyst and it does not appear likely that a bullish catalyst will come from economic data this week. The highlight this week will likely be the US retail sales report that comes out on Wednesday.
Analysts have set their estimates for a big 8% drop in sales last month. With the forecast already setting expectations for a significant decline, it begs the question, how bad does this report need to be for it to benefit dollar bears?
Aside from retail sales, market participants will be keeping a close eye on the weekly jobless claims report. But despite the significantly large amount of claims over the past few weeks, the report has not accompanied much of a reaction in the markets as of late.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.30.
The projected lower bound is: 1.22.
The projected closing price is: 1.26.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 88.2467. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.74. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 16 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 162.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 16 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 13 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.005 at 1.258. Volume was 73% below average (consolidating) and Bollinger Bands were 93% wider than normal.
Open High Low Close Volume___
1.261 1.263 1.258 1.258 31,359
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.24 1.26 1.27
Volatility: 11 21 14
Volume: 118,835 125,465 112,728
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX GBP= is currently 0.6% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into GBP= (mildly bullish). Our trend forecasting oscillators are currently bullish on GBP= and have had this outlook for the last 4 periods.