Home FX British Pound: USD/GBP (GBP=X) Roles Over

British Pound: USD/GBP (GBP=X) Roles Over

British Pound: USD/GBP (GBP=X) Roles Over

The British pound broke down a bit during the trading session on Tuesday, reaching towards 1.30 level. The 50 day EMA sits in that general vicinity and it looks like we are going to try to break down below there. If the market breaks down below the 1.30 level, then it’s possible that we start looking towards 1.29 level for support next. If that gives, then it’s likely that the 200 day EMA underneath will be targeted as the next support level which is currently near the 1.27 level.

To the upside, if the 1.30 level hold as support, it’s likely that the market could bounce from here and try to get back towards the 1.32 handle. At this point, it’s very likely that the US Federal Reserve will have to do some type of interest-rate cut to calm down the markets, and that will bring the interest rate differential closer to each other with these currencies, and therefore the British pound will have to be priced at a higher level.

The 1.35 level above is the longer-term target, but we need to get through the 1.32 level to begin with. It doesn’t mean that we get there overnight, just that it’s likely to reflect some type of repricing. That being said though, we are in a very tenuous situation globally right now so there could be a break down and run towards the greenback but all things being equal it certainly looks as if the buyers will probably try to support this pair.

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 white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 47.1254. This is not an overbought or oversold reading. The last signal was a sell 1 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 47.37. 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 61 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 -22. This is not a topping or bottoming area. The last signal was a sell 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 buy 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.291. Volume was 92% below average (consolidating) and Bollinger Bands were 11% wider than normal.

Open     High      Low     Close     Volume___
1.290 1.291 1.287 1.291 8,230
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.29 1.30 1.27
Volatility: 14 10 10
Volume: 113,361 107,608 110,632

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 1.6% above 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 43 periods.

Previous articleEuro: USD/EUR (EUR=X) – Dollar Bulls Encouraged By Fiscal Stimulus Prospects
Next articleCanadian Dollar: USD/CAD (CAD=X) Stimulated
S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.