British Pound: USD/GBP (GBP=X) Investors watching for a potentially key Brexit deal vote on Thursday
The Pound-to-Dollar exchange rate is trading at 1.3032 at the start of a new week in which we expec the pair to be greatly affected by heightened Brexit uncertainty.
The granting of a lenthy Brexit delay – or alternatively, no delay at all – by the EU will determine where the Pound-to-Dollar exchange rate ends the week. Domestically, a breakthrough in talks between Labour and the Conservatives could spur a rally to fresh multi-month highs as this would suggest a Brexit deal can finally command the support of the House of Commons.
From a technical perspective, the pair has now broken below a key trendline which suggests a broadly bearish wash to the outlook.
Yet at the same time the lack of downside penetration cautions against an overly bearish stance and we are neutral overall, until a stronger move either way supplies confirmation.
The pair has formed a possible double top or other complex topping pattern at the highs but it remains above the neckline for the pattern, and until this is breached the pattern lacks confirmation, and the risk of a resurgence remains.
If there was a break below the neckline at the 1.2950, however, it would signal a deeper bearish breakdown to a potential downside target at 1.2780 and the February lows, or even 1.2700 at the level of the S2 monthly pivot.
Momentum, as measured by the RSI indicator, is bearishly inclined as it continues to fall even though the market hasn’t followed suit.
The 200-day moving average (MA), sitting at 1.2975, just above the neckline, remains a tough obstacle to further losses too. Large MAs often provide strong levels of support. A break below 1.2950 – or perhaps even more safely 1.2925, could, however, confirm the 200 as broken. A break on a closing basis would also provide bearish confirmation.
At the same time, we cannot discount the possibility that the double top fails and the uptrend resumes, pushing the exchange rate substantially higher.
A break back above the March 13 highs would probably provide the necessary confirmation for an extension up to a target at 1.3550, which is a strong resistance level made up of a combination of both the 200-week MA and the R2 monthly pivot, a level used by traders to assess the strength of the trend, and a strong support and resistance level in itself.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.33.
The projected lower bound is: 1.28.
The projected closing price is: 1.30.
A white body occurred (because prices closed higher 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 20 white candles and 28 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 33.8006. This is not an overbought or oversold reading. The last signal was a buy 20 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 45.13. 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 27 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 -98. This is not a topping or bottoming area. The last signal was a buy 0 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 12 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.001 at 1.305. Volume was 61% below average (consolidating) and Bollinger Bands were 12% narrower than normal.
Open High Low Close Volume___
1.303 1.307 1.302 1.305 69,318
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.31 1.31 1.30
Volatility: 9 11 11
Volume: 177,134 174,819 179,733
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 0.6% above its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 4 periods.