British Pound: USD/GBP (GBP=X) soars alongside stocks as equities look past jobless claims

British Pound: USD/GBP (GBP=X) soars alongside stocks as equities look past jobless claims

British Pound: USD/GBP (GBP=X) soars alongside stocks as equities look past jobless claims

The British Pound was the best-performing major currency on Thursday, rallying alongside a broad “risk-on” tilt in global equities. Lately, Sterling appears to have become more sensitive to risk assets. On Wall Street, the Dow Jones and S&P 500 closed 6.38% and 6.24% higher respectively. The upbeat mood from investors sapped the appeal of safety, sending the haven-linked US Dollar lower as it extended losses.

Traders largely brushed aside a 3.28 million rise in US jobless claims last week, a record. Rather investors focused on the fundamental theme that aggressive fiscal stimulus can blunt the economic fallout from the coronavirus outbreak. Overnight, Senators passed a US$2 trillion virus relief bill that is expected to be pushed through the House later today and then signed off by President Donald Trump before the weekend.

Just before Wall Street closed for trading yesterday, 4 Senators hinted at possibly delaying a vote on the stimulus package. That likely caused equities to trim some of their gains on Wednesday as some investors may have been reluctant to fully commit to riskier asset exposure. Once the bill was voted on overnight, greatly increasing the certainty of its implementation, investors may have spent Thursday fully baking in its passage.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

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

The projected upper bound is: 1.26.

The projected lower bound is: 1.19.

The projected closing price is: 1.23.

Candlesticks

A white body occurred (because prices closed higher 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.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 93.0470. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 47.49. 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 3 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 20. This is not a topping or bottoming area. The last signal was a buy 3 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 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.007 at 1.227. Volume was 66% below average (consolidating) and Bollinger Bands were 317% wider than normal.

Open     High      Low     Close     Volume___
1.220 1.230 1.213 1.227 36,995
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: 34 20 13
Volume: 133,977 117,327 111,534

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 3.2% 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 55 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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