British Pound: USD/GBP (GBP=X) Breaks Down A Bit

British Pound: USD/GBP (GBP=X) Breaks Down A Bit

British Pound: USD/GBP (GBP=X) Breaks Down A Bit

The British pound has initially broken above the 1.30 level, but then broke down below there for the session on Wednesday. Ultimately, the market is falling, but probably reflects the US dollar more than anything else. The British pound has done fairly well against other currencies so at this point it’s likely that although we are drifting lower here, if you are looking to play the British pound to the upside, you should probably do so against other currencies such as the Australian dollar. Ultimately, this is a market that is struggling a bit, but I do think that there is a significant amount of support underneath that should offer plenty of fight.

If the market was to break above the 50 day EMA which is painted in red on the chart, then the market will probably go looking towards 1.32 handle. If you are looking to short the British pound, this probably isn’t the place to do it as there is so much in the way of noise just below. Ultimately though, the market is very noisy and of course very difficult to trade at this point as the US dollar is by far one of the strongest currencies around the world, despite the fact that inflation numbers coming out of the United Kingdom were better than anticipated. All things being equal though, the US numbers continue to be better than the rest of the world so it’s likely that the greenback continues to strengthen a bit here, but I don’t think that it breaks down the pair.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.31.

The projected lower bound is: 1.27.

The projected closing price is: 1.29.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
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.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 40.2572. 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 42.58. 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 sell 46 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 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 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.007 at 1.292. Volume was 2% below average (neutral) and Bollinger Bands were 33% narrower than normal.

Open     High      Low     Close     Volume___
1.300 1.302 1.291 1.292 100,344
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.30 1.31 1.27
Volatility: 7 10 9
Volume: 105,776 101,485 112,623

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 1.8% above its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 28 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

Latest posts by HEFFX Australia (see all)