British Pound: USD/GBP (GBP=X) slumps just hours after soaring to five-month high as investors fear DUP will torpedo Brexit deal
The pound had a tumultuous day against the dollar today after Prime Minister Boris Johnson revealed a Brexit deal had been agreed with the European Union .
Sterling rose by 1 per cent this morning towards $1.30 which marked a five-month high for the currency as Mr Johnson headed for a crunch EU summit in Brussels.
But the currency then plunged this afternoon when it soon dawned on investors that there was no guarantee of the UK Parliament backing the agreement.
The volatility comes after the pound gained more than 6 per cent in value against the dollar this week as hopes increased of a Brexit deal by the end of October 31.
The British Chambers of Commerce warned there was ‘still a long way to go’ before business could feel confident of a deal being struck.
The announcement by Mr Johnson followed days of intense negotiations, but he is expected to face a tough task getting the agreement through Parliament.
With the Commons expected to sit on Saturday to discuss it – the first weekend session for 37 years – the DUP insisted it still could not yet back the Government’s Brexit plans.
The stance of the DUP is important because the party wields influence over some Tory Brexiteers.
In Mr Johnson’s announcement today, he tweeted: ‘We’ve got a great new deal that takes back control.
‘Now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment.’
European Commission president Jean-Claude Juncker tweeted: ‘Where there is a will, there is a deal – we have one!
‘It’s a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions. I recommend that EUCO endorses this deal.’
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 1.25.
The projected upper bound is: 1.31.
The projected lower bound is: 1.27.
The projected closing price is: 1.29.
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 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 84.8064. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 6 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 72.03. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 46 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 119.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 6 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 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.002 at 1.287. Volume was 94% below average (consolidating) and Bollinger Bands were 121% wider than normal.
Open High Low Close Volume___
1.289 1.289 1.287 1.287 7,339
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.26 1.23 1.27
Volatility: 17 12 10
Volume: 103,313 114,166 141,513
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 1.2% above its 200-period moving average and is in an upward 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 bullish on GBP= and have had this outlook for the last 4 periods. Our momentum oscillator is currently indicating that GBP= is currently in an overbought condition.
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