British Pound: USD/GBP (GBP=X) Reverses Lower From Major Resistance

British Pound: USD/GBP (GBP=X) Reverses Lower From Major Resistance

British Pound: USD/GBP (GBP=X) Reverses Lower From Major Resistance

Volatility was heightened in the global markets at the European open as investors fled from risky assets in favor of safe-haven assets like gold and bonds. The currency markets appear to be little impacted by the shift to risk aversion as the major currencies trade within typical price ranges.

The S&P 500 is down about two and a half percent shortly after the European open while the UK FTSE has shed about three percent. Most media outlets are attributing the decline in equity markets today to an escalation in fears over the Coronavirus.

The week ahead is a quiet one in terms of economic data pertaining to GBP/USD. The highlight will be US consumer confidence figures on Tuesday and then US GDP and durable goods orders on Thursday. Several members of the Bank of England are scheduled to speak throughout the week.

There were three major economic releases from the UK last week and all came in ahead of analyst expectations. Nevertheless, Sterling posted a weekly loss against the dollar. The lack of buying last week could be signaling more losses to come for the British pound.

Technical Analysis

GBP/USD has been trading around a major level at 1.2961. This level served as a notable barrier in the fourth quarter and then acted as support earlier this year. The pair reversed lower after briefly scaling above it on Friday and the momentum is once again to the downside.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.31.

The projected lower bound is: 1.27.

The projected closing price is: 1.29.

Candlesticks

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 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 37.4800. This is not an overbought or oversold reading. The last signal was a sell 4 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 44.46. 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 49 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 -57. 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 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.004 at 1.293. Volume was 14% above average (neutral) and Bollinger Bands were 30% narrower than normal.

Open     High      Low     Close     Volume___
1.296 1.297 1.288 1.293 115,400
Technical Outlook 
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: 8 10 10
Volume: 105,845 100,820 112,486

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 1.8% above 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 31 periods.

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