British Pound: USD/GBP (GBP=X) pair trades relatively flat

British Pound: USD/GBP (GBP=X) pair trades relatively flat

British Pound: USD/GBP (GBP=X) pair trades relatively flat

GBP/USD rallied yesterday to nearly break to a fresh one-week high before sellers stepped in to drive the pair lower. The currency pair trades relatively flat on the week thus far and has been mostly confined to a range in February.

Rate cut expectations in the US have triggered a pullback in the trade-weighted dollar index (DXY). The futures markets are showing a roughly 80% probability of a cut in June, up from 50% just a week ago.

Fed member Kaplan offered a different view yesterday and said it was too soon to determine if the recent escalation in Coronvirus outbreaks warrants a policy adjustment.

DXY rallied to highs not seen since May 2017 last week and turned lower after falling slightly short of testing the 100.00 level. The index is down about one percent from recent highs.

Brexit developments are likely to lead to elevated volatility for the pound to dollar exchange rate. The UK will begin formal negotiations with the EU on Monday which will pave the way for trade terms between the two economies. UK PM Johnson has taken a hard stance on negotiations by stating that he will not permit any extensions beyond the year-end deadline.

Technical Analysis

The drop in GBP/USD in early day trading today has momentum behind it although it might be too soon to confirm that the pair has turned lower in the downtrend that has dominated since shortly after the UK election.

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: 1.31.

The projected lower bound is: 1.27.

The projected closing price is: 1.29.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 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 55.1914. 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 44.28. 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 51 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 -32. 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 sell 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.009 at 1.291. Volume was 22% above average (neutral) and Bollinger Bands were 25% narrower than normal.

Open     High      Low     Close     Volume___
1.300 1.301 1.290 1.291 123,918
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.30 1.30 1.27
Volatility: 9 9 10
Volume: 109,775 101,731 112,265

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 1.7% 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 33 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

Latest posts by HEFFX Australia (see all)