British Pound: USD/GBP (GBP=X) dip comes as election poll tailwind turns into headwind
The Pound was scraping along the bottom of the major currency barrel on Tuesday although further losses could be just around the corner, according to some analysts, because momentum is shifting to the downside on the charts just as election opinion polls are turning from tailwind into a headwind.
Sterling ceded ground to all major rivals Tuesday as earlier gains were unwound in response to further suggestions the Conservative Party lead over the opposition Labour Party is narrowing, forcing investors to contemplate the implications that a radical socialist economic agenda could have for markets. Some weekend polls had already tipped that as a possibility.
Kantar said Tuesday that support for the governing Conservative Party fell by two percentage points this week and that the radical opposition Labour Party picked up five percentage points. Polling work was carried out between November 21 and 25, which means respondents had more time to assess the opposition manifesto released on November 22 than they did the Conservative pitch that was unveiled only on Sunday.
The Pound had enjoyed a strong run higher throughout much of November as polls showed the Conservatives pulling ahead of Labour in key electoral battlegrounds although it wasn’t until after the manifesto launches of 2017 that the polling gap between the two began to close in earnest. And with the subsequent narrowing of that lead ultimately producing a hung parliament investors are growing fearful of a repeat performance in the weeks ahead, prompting them to abandon the Pound on Tuesday.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.31.
The projected lower bound is: 1.27.
The projected closing price is: 1.29.
A white body occurred (because prices closed higher than they opened).
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 24 white candles and 24 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX GBP=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 46.9388. This is not an overbought or oversold reading. The last signal was a sell 6 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 57.17. 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 26 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 11. This is not a topping or bottoming area. The last signal was a sell 6 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 21 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.005 at 1.291. Volume was 21% below average (neutral) and Bollinger Bands were 63% narrower than normal.
Open High Low Close Volume___
1.286 1.291 1.283 1.291 89,511
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.29 1.27 1.27
Volatility: 7 10 10
Volume: 98,462 106,745 132,752
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 1.6% 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 2 periods.
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