British Pound: USD/GBP (GBP=X) Flirts with Critical Technical Level

British Pound: USD/GBP (GBP=X) Flirts with Critical Technical Level

British Pound: USD/GBP (GBP=X) Flirts with Critical Technical Level

The upward momentum in GBP/USD weakened on Wednesday as the pair trades near a technical area that drew sellers. Nevertheless, the exchange rate has held up and there is potential for more gains, especially as the dollar has started to soften this week.

Market sentiment in the UK housing market continued to improve in January with a rise in both new buyers and sellers. Survey data showed a net price increase of 17% in January which was the first time surveyors reported an increase in prices since the summer of 2018. The figure was well ahead of analyst expectations which called for an increase of 3%. Further, there was an upward revision for December to 0% from the originally reported decline of 2%.

Simon Rubinsohn, Chief Economist at reporting agency RICS, attributed the improvement to rising sentiment in the aftermath of the General Election.

Risk sentiment in the markets deteriorated after reports of a record number of Coronvirus deaths on Wednesday. This shift in sentiment was abrupt as reports on Tuesday indicated new cases had fallen to a two-week low, suggesting a significant step forward. As of late, the dollar has risen during periods of risk appetite, if the shift to risk aversion proves to be sustained, the greenback stands to par back recent gains.

Technical Analysis

GBP/USD showed upward momentum in the early week after turning higher from its 100-day moving average. The momentum slowed mid-week after a horizontal level at 1.2960 came into play.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.33.

The projected lower bound is: 1.28.

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 26 black candles for a net of 2 black candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

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 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 83.0508. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 2 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 51.87. 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 43 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 51. This is not a topping or bottoming area. The last signal was a buy 3 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 buy 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.305. Volume was 87% below average (consolidating) and Bollinger Bands were 33% narrower than normal.

Open     High      Low     Close     Volume___
1.305 1.305 1.303 1.305 13,584
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.30 1.31 1.27
Volatility: 11 10 9
Volume: 98,525 99,136 112,684

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 2.8% 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 25 periods.

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