British Pound: USD/GBP (GBP=X) may see 1985 low, UK economy contracts in second quarter
The British Pound overwhelmingly underperformed against its major counterparts after the UK economy unexpectedly contracted 0.2% q/q in the second quarter according to preliminary estimates. It was the first contraction since 2012 amidst rising worries over the economic consequences of a “no-deal” Brexit. A second consecutive quarter of declines will place the nation in a technical recession.
BRITISH POUND TECHNICAL ANALYSIS
GBP/USD thus closed under March 2017 lows on Friday as it looked to extend the dominant downtrend. Ahead lays the psychological barrier between 1.1950 and 1.2018. This area contains the lows Pound Sterling achieved in 2016 which if breached, expose levels not seen since 1985. In the event of a turn higher, keep an eye on the falling channel of resistance from May which may keep the downtrend intact.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1.24.
The projected upper bound is: 1.22.
The projected lower bound is: 1.19.
The projected closing price is: 1.21.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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 22.8625. This is not an overbought or oversold reading. The last signal was a buy 5 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 29.44. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 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 -89. This is not a topping or bottoming area. The last signal was a buy 5 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 sell 11 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.004 at 1.207. Volume was 17% below average (neutral) and Bollinger Bands were 84% wider than normal.
Open High Low Close Volume___
1.205 1.211 1.201 1.207 110,725
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.21 1.25 1.28
Volatility: 6 8 10
Volume: 121,720 121,715 160,267
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 5.8% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of GBP= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 24 periods. Our momentum oscillator is currently indicating that GBP= is currently in an oversold condition.