British Pound: USD/GBP (GBP=X) Probes Trend Channel Resistance
The pound to dollar exchange rate is attempting to post a third consecutive day of gains and is probing a notable resistance area. GBP/USD turned higher on Monday and extended gains yesterday after an upbeat UK jobs report.
Sterling has been particularly sensitive to incoming data as the Bank of England recently made clear that a rate cut is under consideration. Last week, the three most important economic releases – GDP, consumer price index, and retail sales – all fell short of expectations.
Tuesday’s jobs report has certainly shifted sentiment, however, investors will want to see the outcome of data later in the week. Friday’s release of purchasing managers’ views towards the manufacturing and services industries will be widely watched as it is the last release ahead of next week’s bank meeting. In the last two reports, both the manufacturing and services PMI’s have fallen short of expectations. However, analysts are expecting both have rebound in December.
The rally in GBP/USD has met the upper bound of a declining trend channel that has encompassed price action in the year thus far. The same trend channel resistance held the pair lower ahead of last week’s UK retail sales report. The exchange rate fell a few pips short of testing it after yesterday’s jobs report.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.33.
The projected lower bound is: 1.30.
The projected closing price is: 1.31.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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 27 white candles and 22 black candles for a net of 5 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 62.2095. This is not an overbought or oversold reading. The last signal was a sell 13 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 55.95. 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 26 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 71. This is not a topping or bottoming area. The last signal was a buy 1 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 10 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.009 at 1.314. Volume was 0% below average (neutral) and Bollinger Bands were 38% narrower than normal.
Open High Low Close Volume___
1.305 1.315 1.303 1.314 103,132
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: 7 9 9
Volume: 105,707 98,589 116,907
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 3.5% 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 8 periods.
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