British Pound: USD/GBP (GBP=X) currently testing support which could trigger a turn higher

British Pound: USD/GBP (GBP=X) currently testing support which could trigger a turn higher

British Pound: USD/GBP (GBP=X) currently testing support which could trigger a turn higher

GBP/USD initially showed upward momentum yesterday but rolled over on the back of a strong dollar and has since declined to a one-week low. The pair is currently testing support which could trigger a turn higher.

The week ahead is expected to be a busy one and volatility is likely to be elevated. The equity markets have already seen a sharp rise in volatility as the rising threat of the Coronavirus has triggered a shift to risk aversion. Equities stand to see more volatility as most of the top-traded companies will report earnings this week.

GBP/USD is less susceptible to shifts in risk sentiment but other events will influence trading in the pair. This is the last week of the month and often volatility is seen on the back of positioning adjustments into month-end.But more importantly, investors will look to the Bank of England meeting on Thursday in anticipation of a possible rate cut. Data last week from the UK was positive and the markets have since reduced the chance of a rate reduction this week to roughly 50%, down from around 70% in the middle of the month.

Later in the North American session, the latest durable goods orders and consumer confidence figures will be released from the US. As well, Fed member Williams is scheduled to speak.

Technical Analysis

GBP/USD is on pace to post a fourth consecutive day of declines, although important support has come into play.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.32.

The projected lower bound is: 1.28.

The projected closing price is: 1.30.

Candlesticks

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 24 white candles and 25 black candles for a net of 1 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 35.8361. This is not an overbought or oversold reading. The last signal was a sell 17 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 45.33. 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 30 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 -69. This is not a topping or bottoming area. The last signal was a buy 5 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 sell 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.005 at 1.301. Volume was 3% below average (neutral) and Bollinger Bands were 46% narrower than normal.

Open     High      Low     Close     Volume___
1.305 1.306 1.297 1.301 99,531
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.31 1.31 1.27
Volatility: 7 9 9
Volume: 102,422 98,837 115,743

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 2.5% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 12 periods.

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