British Pound: USD/GBP (GBP=X) remains volatile and declining
GBP/USD remains volatile and declined by 1.1% last week. There are only three events in the upcoming week. Here is an outlook for the highlights of the upcoming week and an updated technical analysis for GBP/USD.
The impressive pound rally ended last week, as the British parliament voted down a government bill over Brexit. Prime Minister Johnson responded by pulling the Brexit bill, and it remains unclear what happens next. The U.K. is scheduled to depart the EU on October 31, but it’s doubtful this will happen. The EU has granted another 3-month extension, and there is also the possibility of a snap election in December. British data disappointed last week, as the budget deficit rose to GBP 8.7 billion, while CBI Industrial Expectations slipped to -37, its lowest level since 2010.
In the U.S, manufacturing data continues to sputter. Core durable goods orders fell by 0.3%, the second decline in three months. The headline reading declined by 1.1%, its first decline in four months. The manufacturing PMI improved to 51.5, above the estimate of 50.7. This points to minimal expansion.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 1.26.
The projected upper bound is: 1.31.
The projected lower bound is: 1.26.
The projected closing price is: 1.28.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white 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.
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 21.3533. This is not an overbought or oversold reading. The last signal was a sell 3 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 62.78. 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 4 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 33. This is not a topping or bottoming area. The last signal was a sell 4 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 11 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.001 at 1.283. Volume was 97% below average (consolidating) and Bollinger Bands were 139% wider than normal.
Open High Low Close Volume___
1.282 1.283 1.281 1.283 3,771
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.29 1.24 1.27
Volatility: 11 12 10
Volume: 111,114 114,828 139,824
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 0.9% above its 200-period moving average and is in an upward 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 bullish on GBP= and have had this outlook for the last 10 periods.
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