British Pound: USD/GBP (GBP=X) Reverses

British Pound: USD/GBP (GBP=X) Reverses

British Pound: USD/GBP (GBP=X) Reverses

The British pound initially pulled back during the trading session on Tuesday but found enough buyers to turn around and send this market higher. By breaking the top of the inverted hammer from the previous session, this is a very bullish sign, but we obviously have a lot of resistance just above, especially near the 1.25 handle. This is a significant level because it is a large, round, psychologically significant figure. If we can break above that level, it’s very likely that the British pound should continue to go much higher. In fact, that would be an extraordinarily bullish sign as it would also break the top of a bullish flag.

To the downside, if we were to break down below the lows of the trading session from Tuesday it would in fact be a very negative sign. Quite frankly, at one point it looks like the market with the going to break down and go looking towards the 1.20 level underneath. That is an area that is logically supportive due to the large, round, psychological importance of the round number. All things being equal, if we were to break above the top of the potential bullish flag, we could be looking at a move towards the 1.35 level eventually, which would obviously be very bullish and very “risk on.” This doesn’t mean that it would happen overnight, because clearly there will be a lot of headlines between here and there that could cause a lot of chaos. At this point, a break above the 1.25 level means that you should be buying dips.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1.27.

The projected lower bound is: 1.19.

The projected closing price is: 1.23.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 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.

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 40.0670. 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 48.69. 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 11 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 48. This is not a topping or bottoming area. The last signal was a buy 11 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 buy 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.002 at 1.232. Volume was 84% below average (consolidating) and Bollinger Bands were 102% wider than normal.

Open     High      Low     Close     Volume___
1.233 1.235 1.231 1.232 18,094
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.23 1.26 1.27
Volatility: 21 21 14
Volume: 138,242 125,083 112,797

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 2.7% below its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 63 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.