British Pound: USD/GBP (GBP=X) Recovery Rally Blocked at 1.3050 Resistance
GBP/USD was lifted higher last week after testing its 100-day moving average. The pair has made a notable recovery although the bearish momentum from earlier in the month stands to hinder further gains.
The dollar index (DXY), while posting a second consecutive weekly gain, has shown signs of weakness. The greenback declined against all of the major commodity currencies as well as Sterling last week which might be offering an early signal for a pullback.
The euro was the weakest of the bunch last week, and as the highest weighted currency in the dollar index, it was responsible for a bulk of the weekly gain in DXY. As a result, EUR/GBP declined to a fresh yearly low and is on the verge of breaking to lows not seen since shortly after the Brexit vote.
The week is expected to have a slow start with US banks on holiday and light economic data. UK jobs data will be reported on Tuesday and the Fed will release minutes from their last meeting on Wednesday. Inflation data out of Britain will also be released on Wednesday. CPI is forecast to rise by 1.7% in the year to January versus a rise of 1.3% in the prior reading.
Equity markets shrugged off Coronavirus fears and the S&P 500 rose for a second consecutive week to close at a fresh record high. The UK FTSE diverged from the global markets and ended last week with a small loss.
The smaller time frames for GBP/USD point to an uptrend. The weekly chart, however, suggests the upside might be limited in the week ahead as a result of the bearish candle posted in the first week of the month.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.30.
The projected upper bound is: 1.32.
The projected lower bound is: 1.28.
The projected closing price is: 1.30.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 69.5220. This is not an overbought or oversold reading. The last signal was a sell 0 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 48.39. 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 45 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 0. This is not a topping or bottoming area. The last signal was a buy 5 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 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.000 at 1.300. Volume was 98% below average (consolidating) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
1.301 1.301 1.300 1.300 1,677
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.30 1.31 1.27
Volatility: 6 10 9
Volume: 95,942 99,500 112,318
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 2.4% 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 27 periods.