British Pound: USD/GBP (GBP=X) Rallies Yet Again

British Pound: USD/GBP (GBP=X) Rallies Yet Again

British Pound: USD/GBP (GBP=X) Rallies Yet Again

The British pound initially drifted a little bit lower during the trading session on Tuesday but continues to find support at the 1.15 level. This is an extraordinarily low level to say the least, and the British pound is most certainly oversold at this point. The question now is whether or not this is simply going to be consolidation before another move to the downside, or if it is the market trying to form a base in order to bounce from here. The 1.20 level above is the initial target on any significant bounce, followed by the 1.2250 level. All things being equal, I do think that the market will probably continue to be very noisy, and with the United Kingdom and lockdown it certainly doesn’t help the British pound. That being said, this thing is completely oversold.

The alternate scenario beyond a bounce would be a return to the 1.15 handle, and a breakdown below that level. If we did do that, the 1.1250 level would be my next target, followed by the 1.10 handle after that. Ultimately, this is going to be a great “buy-and-hold” opportunity eventually, but it’s probably a bit early to suggest that right now. This will be especially true if the US economy can stay somewhat resilient and not get hit too hard by the coronavirus effect. The market does have a habit of having “rip your face off rallies” in the middle of massive bear markets, so don’t be surprised if we get significant momentum to the upside based upon some type of good news. However, they also do tend to pullback in order to confirm a bottom.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 1.25.

The projected upper bound is: 1.22.

The projected lower bound is: 1.15.

The projected closing price is: 1.18.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 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 43.4495. This is not an overbought or oversold reading. The last signal was a buy 1 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 33.67. 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 1 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 -58. This is not a topping or bottoming area. The last signal was a buy 1 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 9 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.007 at 1.183. Volume was 65% below average (consolidating) and Bollinger Bands were 374% wider than normal.

Open     High      Low     Close     Volume___
1.176 1.183 1.173 1.183 37,655
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.19 1.28 1.27
Volatility: 31 18 13
Volume: 134,272 115,802 111,453

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 6.7% 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 53 periods.

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