British Pound: USD/GBP (GBP=X) Holds Within a 50 pip Range

British Pound: USD/GBP (GBP=X) Holds Within a 50 pip Range

There was some strong downside momentum in GBP/USD on Tuesday after it failed to cross an important resistance level. That momentum has died down significantly as the pair has fallen into a range. On a 4-hour chart, the 100 and 200-period moving averages appear to be containing price action.

There are several factors that stand to impact the exchange rate over the short-term. To start, the final release of quarterly GDP out of the US is scheduled for release later today. As a final release, however, the data tends to not to have a significant impact, unless there is a big deviation from expectations.

What stands to have more of an impact on the US economy, and on US monetary policy, is the ongoing trade war between US and China. President Trump and China’s President Xi will be meeting later this week at the G20 summit taking place in Japan. I am speculating that there will be a drop in dollar volatility until the outcome of the meeting is announced.

Aside from the GPD data release today, there are a few other releases that pertain to GBP/USD. One that I will be watching is the US weekly unemployment claims. This figure rarely has a sustained move on the markets, however, it is a good indicator of how the jobs market is doing. This is particularly important when it comes to speculation of US monetary policy easing which has been a major driver for the greenback.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.28.

The projected lower bound is: 1.26.

The projected closing price is: 1.27.

Candlesticks

A white body occurred (because prices closed higher 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 20 white candles and 30 black candles for a net of 10 black candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX GBP=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 52.2304. This is not an overbought or oversold reading. The last signal was a sell 1 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 49.73. 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 19 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 43. This is not a topping or bottoming area. The last signal was a buy 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 5 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.002 at 1.271. Volume was 51% below average (consolidating) and Bollinger Bands were 40% narrower than normal.

Open High Low Close Volume___
1.268 1.272 1.267 1.271 75,763

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period     50-period     200-period
Close: 1.27 1.28 1.29
Volatility: 8 7 10
Volume: 118,196 137,681 171,521

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.

Summary

FOREX GBP= is currently 1.6% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. 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 1 periods.

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