British Pound: USD/GBP (GBP=X) road-blocked on charts after best week since 2009

British Pound: USD/GBP (GBP=X) road-blocked on charts after best week since 2009

British Pound: USD/GBP (GBP=X) road-blocked on charts after best week since 2009

The Pound-to-Dollar rate closed out its largest weekly gain for over a decade on Friday but it’s now tipped to ecounter resistance on the charts that could act as a road-block Sterling over the coming days, although investor appetite for risk and demand for the Dollar will be the dominant driver of the exchange rate. 

Sterling surged into the weekend amid a broad retreat by the U.S. greenback which, when combined with the scale of earlier losses suffered by the Pound, helped the British currency to outperform most of its major rivals. This lifted the Pound-to-Dollar rate by more than 7% last week, its largest five day gain since May 2009, which has helped Sterling to reverse much of the earlier March decline that had pushed it to its lowest level since 1985. 

Gains built despite revelations that Prime Minister Boris Johnson and Health Secretary Matt Hancock have both contracted coronavirus, which wobbled the Pound briefly. Coronavirus has exacted a human toll on the government but the policy response path was already clearly laid out long before then and given that implementation of that response is now well underway, the impact of this on Sterling might be limited to Friday’s knee-jerk move lower.

The virus could take the PM out of action for weeks but wouldn’t stop the government executing the already-set-out plan to plug the hole that’s been torpedoed into the side of the economy by the coronavirus shutdown. The market will keep one eye on the government in case new economic support or restrictions are announced, although technical factors and demand for the greenback could dominate the Pound-to-Dollar rate this week And that might be bad news for Sterling because the charts indicate limited if-any remaining upside, while analysts expect the Dollar to recover its poise over the coming days.

Technical Indicators

Overall, the bias in prices is: Sideways.

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

The projected upper bound is: 1.28.

The projected lower bound is: 1.20.

The projected closing price is: 1.24.

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 21 white candles and 29 black candles for a net of 8 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 94.8366. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 50.60. 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 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 61. This is not a topping or bottoming area. The last signal was a buy 4 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 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.006 at 1.240. Volume was 70% below average (consolidating) and Bollinger Bands were 295% wider than normal.

Open     High      Low     Close     Volume___
1.243 1.247 1.236 1.240 33,033
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.19 1.27 1.27
Volatility: 36 21 13
Volume: 136,398 118,605 111,815

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 2.1% 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 56 periods.

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