British Pound: USD/GBP (GBP=X) Brexit turmoil
After an uneventful week, GBP/USD has dropped sharply on Thursday. In North American trade, the pair is trading at 1.3080, down 0.85% on the day. On the release front, U.S. Final GDP for the fourth quarter posted a 2.2% gain, shy of the estimate of 2.4%. Unemployment claims fell to 211 thousand, easily beating the estimate of 221 thousand. The U.K. will release GfK consumer confidence, with a weak reading of -14 expected. Friday will be busy on both sides of the pond. The U.K. releases final GDP for Q4, and the U.S. will publish consumer spending and inflation numbers.
GBP/USD managed to hold its own during the week, despite the Brexit turmoil. However, the pound finally buckled on Thursday, falling sharply. This followed the parliamentary votes on Wednesday, when lawmakers rejected eight alternative options to the Brexit withdrawal agreement. Parliament is expected to vote on the withdrawal agreement on Friday, but there’s a strong chance that it too will be rejected. The EU agreed to extend the March 29 Brexit deadline until April 12, meaning that the U.K. would depart without a deal if parliament rejects the withdrawal agreement. A no-deal scenario would be damaging to the British economy, so traders should be prepared for further volatility from the pound as the chaos surrounding Brexit continues.
Global trade tensions have weighed on inflation levels in the developed economies, and the U.S. is no exception. However, with the Fed saying it will put a hold on rates until 2020, could inflation move higher? At the Fed policy meeting, policymakers lowered their inflation forecast for 2020, citing weakness in the Chinese and European economies. However, the chief economist of Credit Suisse, James Sweeney, has taken a different tack, saying that U.S. inflation could climb as high as 2.3% next year, in response to the lack of rate hikes. Sweeney said that although inflation remains below the Fed target of 2.0%, there are signs in the services sector of inflation picking up.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.33.
The projected lower bound is: 1.28.
The projected closing price is: 1.31.
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 20 white candles and 28 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 52.1796. This is not an overbought or oversold reading. The last signal was a buy 13 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 44.24. 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 sell 20 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 -118.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 19 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 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.014 at 1.305. Volume was 7% above average (neutral) and Bollinger Bands were 24% narrower than normal.
Open High Low Close Volume___
1.319 1.321 1.303 1.305 192,398
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.31 1.30
Volatility: 10 12 11
Volume: 178,384 174,955 179,621
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 0.6% above 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 11 periods.
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