British Pound: USD/GBP (GBP=X) paying attention to the region is going to be crucial
The British pound broke down significantly during the trading session on Tuesday but has bounced a bit as the Americans have stepped on board. This shows just how resilient the British pound is and as a result I think that we have quite a bit of a fight on our hands. The 1.25 level offering significant resistance should be paid attention to, but if we can break above there then it opens up the door to even bigger gains. Quite frankly, I believe that the market at the very least needs to kill time in this area so paying attention to the region is going to be crucial.
This sets up a potential move to the 1.2750 level, or on the downside down to the 1.20 level. It is because of this that we should be paying quite a bit of attention. Looking at this chart, it’s obvious that we are about to make a serious move, but one has to wonder how much more risk appetite there is out there?
After all, there is a significant amount of damage to the global economic situation and that doesn’t necessarily bode well for this pair. Beyond that, the EU and the UK still have a lot of negotiating to do going forward so there is still a huge amount of volatility just waiting to happen. One thing is for sure, we are about to get a significant move and as a result I believe that we are setting up quite nicely for the next couple of handles. The one major thing that you should be concerned about is position size, so keep it small.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.25.
The projected upper bound is: 1.28.
The projected lower bound is: 1.20.
The projected closing price is: 1.24.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with FOREX GBP=), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) 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 90.5156. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 50.06. 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 6 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 79. This is not a topping or bottoming area. The last signal was a buy 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 buy 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.004 at 1.238. Volume was 69% below average (consolidating) and Bollinger Bands were 248% wider than normal.
Open High Low Close Volume___
1.243 1.244 1.236 1.238 34,617
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.20 1.27 1.27
Volatility: 24 21 13
Volume: 136,367 120,214 112,064
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 2.2% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 58 periods.