British Pound: USD/GBP (GBP=X) lost some momentum in its recovery

British Pound: USD/GBP (GBP=X) lost some momentum in its recovery

British Pound: USD/GBP (GBP=X) lost some momentum in its recovery

Last week’s recovery in GBP/USD was peculiar for two reasons. First, because Sterling has been notoriously weak for more than a month now. Second, because the pair managed to rally alongside the dollar.

Early this week the inverse correlation between GBP/USD and the dollar index (DXY) has started to converge a bit as the pair fell lower on Monday while the index rallied towards yearly highs.

While the currency pair still shows potential for further gains, where the dollar moves from here will be important for GBP/USD traders. If DXY ends up breaking above this years high to a fresh 27-month high, I think GBP/USD bulls will have a difficult time justifying their position. Granted, Sterling has shown some strength, but I think it makes more sense to play this strength in the cross rates considering the upward momentum in the greenback.

Having said that, GBP/USD is at a bit of an inflection point and the reaction from current levels might just set the near-term tone.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.24.

The projected upper bound is: 1.23.

The projected lower bound is: 1.20.

The projected closing price is: 1.22.

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 21 white candles and 29 black candles for a net of 8 black candles.

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 81.0811. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 12 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 43.04. 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 buy 4 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 95. This is not a topping or bottoming area. The last signal was a buy 12 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 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.000 at 1.217. Volume was 99% below average (consolidating) and Bollinger Bands were 2% wider than normal.

Open     High      Low     Close     Volume___
1.217 1.217 1.216 1.217 1,204
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.21 1.24 1.28
Volatility: 7 8 9
Volume: 102,866 116,122 156,471

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 4.8% below 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 31 periods.

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