British Pound: USD/GBP (GBP=X) continues to remain firmly bid as investors are seeing a good chance of a Brexit deal
EU’s chief negotiator Michael Barnier wanted a legal text of a potential deal delivered by Tuesday but after negotiating until 1:30 AM yesterday, an agreement could not be made. Talks resume today, taking it right down to the wire as negotiations are not meant to take place during the EU summit which starts tomorrow.
I suspect GBP/USD will extend gains if we get word later in the day that a legal text was finalized. However, UK Prime Minister Johnson still has his work cut out for him.
If he’s able to come to an agreement with EU negotiators today, the deal will still need to be approved by the member states at the EU summit which takes place on Thursday and Friday.
But more importantly, the UK parliament needs to vote on the deal. Since Johnson has lost his majority, it’s unclear if all his efforts will be fruitful since parliament could turn it down.
If a deal is not reached, Johnson will be required to request an extension under the recently passed Benn act. This could get tricky as the British PM has said several times that the UK will leave on October 31 no matter what. But when pressed for an answer, he has also said that he will abide by the law.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 1.24.
The projected upper bound is: 1.31.
The projected lower bound is: 1.26.
The projected closing price is: 1.28.
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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 94.1547. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 71.78. This is where it usually tops. 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 45 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 138.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 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed unchanged at 1.283. Volume was 100% below average (consolidating) and Bollinger Bands were 98% wider than normal.
Open High Low Close Volume___
1.283 1.283 1.283 1.283 11
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.25 1.23 1.27
Volatility: 17 12 10
Volume: 98,632 113,387 141,662
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 0.9% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 3 periods. Our momentum oscillator is currently indicating that GBP= is currently in an overbought condition.
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