British Pound: USD/GBP (GBP=X) Volatility Remains Subdued
GBP/USD has seen a sudden drop in volatility in April and was seen continuing to trade essentially sideways in the early day on Wednesday.
The pair saw some buying yesterday as the dollar broadly lost ground against its major counterparts. The greenback has been following an inverse relationship with the equity markets as of late and was weighed by a rally in the stock markets.
Market participants appear to be more confident that a bottom is in for the stock markets, at least an interim one. The S&P 500 rallied to a fresh three-week high yesterday before paring back a bulk of the gains.
UK Prime Minister Boris Johnson has spent a second night in the hospital. Johnson was admitted to intensive care yesterday when it was announced that Foreign Secretary Dominic Raab would stand in for Johnson.
The economic calendar for the session ahead is relatively light. The Federal Reserve is scheduled to release minutes from its latest FOMC meeting.
The dollar is likely to continue taking its queues from risk sentiment although the commodity currencies seem to be benefiting the most from the dollar weakness seen in the early week. Sterling appears to be less sensitive to swings based on risk appetite in that context.
GBP/USD continues to trade within a downward trending channel. Considering the general lack of momentum, this could very well turn out to be a bull flag pattern.
The exchange tested the upper bound of the channel yesterday and therefore a breach above yesterday’s high would tend to set the pattern into play which would signal a bullish continuation.
Further resistance for the pair is found at 1.2476 for the session ahead, although if the bull flag pattern is activated, the hurdle is not likely to hold sellers for too long.
In the session ahead, support is found at 1.2250. If the pair fails to hold above it, the next level of downside interest comes in at 1.2130 which is currently near the channel bottom.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.28.
The projected lower bound is: 1.20.
The projected closing price is: 1.24.
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 23 white candles and 27 black candles for a net of 4 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 71.8325. This is not an overbought or oversold reading. The last signal was a sell 4 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 51.24. 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 12 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 60. This is not a topping or bottoming area. The last signal was a buy 12 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 9 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.001 at 1.240. Volume was 79% below average (consolidating) and Bollinger Bands were 94% wider than normal.
Open High Low Close Volume___
1.238 1.242 1.238 1.240 23,498
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: 15 21 14
Volume: 137,100 125,741 112,960
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 2.0% below its 200-period moving average and is in an upward 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 bullish on GBP= and have had this outlook for the last 0 periods.