British Pound: USD/GBP (GBP=X) to be impacted by leadership race
The Pound could well extend higher this coming ewek but we are wary of a brief and temporary setback from overbought levels
The Pound-to-Dollar rate is trading at around 1.2732 at the start of the new week, after rising 0.8% in the previous week. Studies of the charts suggest that, notwithstanding a temporary pull-back, the exchange rate is set to continue rising over the next five days.
The 4-hour chart shows the pair has formed a divergence with the RSI momentum indicator. This happens when price makes a new high but it is not corroborated by the RSI. The divergence suggests there is a risk GBP/USD could pull-back, temporarily, probably to support at 1.2670.
Overall, however, it has established a new short-term uptrend, supported by the fact price has formed three sets of higher highs (HH) and higher lows (HL).
Given the old adage that “the trend is your friend” this new uptrend will probably continue higher to a target at 1.2810 and the May highs within the coming week.
We use the 4-hour chart to determine the short-term outlook, which includes the coming week.
The daily chart is bullish and shows the pair will probably rise up to a target at 1.2850 over the next 1-4 weeks.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.28.
The projected upper bound is: 1.29.
The projected lower bound is: 1.26.
The projected closing price is: 1.27.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 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 75.1421. This is not an overbought or oversold reading. The last signal was a buy 10 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 45.19. 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 5 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 110.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 buy 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.003 at 1.273. Volume was 28% below average (neutral) and Bollinger Bands were 13% narrower than normal.
Open High Low Close Volume___
1.270 1.276 1.269 1.273 115,711
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.27 1.29 1.29
Volatility: 4 6 10
Volume: 141,819 150,315 174,423
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 1.6% below its 200-period moving average and is in an downward 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 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 17 periods.