British Pound: USD/GBP (GBP=X) continues to show an aversion to risk with ongoing concerns about the Coronavirus
The markets continue to show an aversion to risk with ongoing concerns about the Coronavirus and a plunge in oil prices after Saudi Arabia and Russia failed to reach an agreement to stabilize prices.
Oil prices were down more than 30% in Asian trading but recovered about a third of the loss as of the European open. The US 10-year bond yield declined to a record low of 0.36%, about half of what it yielded on Friday, but has also recovered part of the losses.
The volatility seen today gives investors more of a reason to look to central bankers and government officials to ease monetary and fiscal policy.
Last week, Andrew Bailey said a rate cut is not imminent despite the Federal Reserve reducing their rates by half a percent in an emergency response to the Coronavirus outbreak. Bailey will be replacing BoE Governor Mark Carney on March 16.
British Prime Minister Boris Johnson will oversee an emergency meeting today to address the recent escalation in the Coronavirus. Last week, Johnson outlined a plan that involved social distancing and delaying the outbreak in hopes a cure will be found. The PM may change his views and try and tackle the outbreak rather than attempt to delay at this point.
GBP/USD was on the verge of breaking out from a downtrend channel that has encompassed price action in the year thus far. Bears stepped in after the European open to drive the exchange rate back below the upper bound of the channel.
The direction of the pair from here will ultimately depend on how the governments and central bankers respond to the escalation in the virus and the volatile weekly open.
From a technical perspective, the pair shows reversal potential considering the trend channel is holding so far, and the selling pressure seen in the first hour of European trading. A sustained drop below 1.3050 can provide further evidence of a turn.
An upward break above 1.3200 would point to a bullish breakout which could lead to significant gains for the pair.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 1.30.
The projected upper bound is: 1.33.
The projected lower bound is: 1.29.
The projected closing price is: 1.31.
A black body occurred (because prices closed lower 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 21 white candles and 29 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 85.4201. 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 58.35. 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 60 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 157.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 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 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.003 at 1.310. Volume was 99% below average (consolidating) and Bollinger Bands were 17% wider than normal.
Open High Low Close Volume___
1.313 1.313 1.309 1.310 778
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.29 1.30 1.27
Volatility: 10 9 10
Volume: 112,347 105,063 110,673
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 3.1% 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 0 periods.