British Pound: USD/GBP (GBP=X) suddenly turns on global risk sell-off

British Pound: USD/GBP (GBP=X) suddenly turns on global risk sell-off

British Pound: USD/GBP (GBP=X) suddenly turns on global risk sell-off

Pound Sterling starts the new week slightly firmer against the Euro with 1 GBP buying 1.1585 EUR on the inter-bank market.

The Pound suffered five consecutive days of losses against the Euro last week, with the exchange rate falling over a percent and a half, confirming near-term momentum now appears to favour the Euro.

Losses came amidst growing expectations that cross-party Brexit talks in the UK were headed for failure while the Pound also found itself caught in the cross-fire of global trade tensions. 

International financial markets were rocked by news that President Donald Trump has increased tariffs from 10% to 25% on $200bn of Chinese goods imported into the U.S. each year, which helped drag the Pound-to-Euro rate below the key 1.16 level late last week.

The Euro performed better amid the market rout than its British counterpart, with some analysts saying the Euro is showing some ‘safe haven’ tendencies. “The Euro… is higher and may finally be benefiting from risk aversion – it’s an increasingly popular funding currency,” says Kit Juckes, a foreign exchange strategist with Société Générale.

Concerning the exchange rate’s outlook for the coming week, the return back beneath the 1.1600 level means the outlook has gone from bullish to neutral from a technical perspective.

Although the pair broke convincingly above the 1.1600 range-high several months ago, it has since been unable to extend meaningfully above that point and has now marked out a new trading range spanning the March 13 high at 1.1802 and the March 21 low at 1.1466.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.32.

The projected lower bound is: 1.28.

The projected closing price is: 1.30.

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 20 white candles and 29 black candles for a net of 9 black candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX GBP=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 23.6209. This is not an overbought or oversold reading. The last signal was a buy 0 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 48.65. 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 52 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 5. This is not a topping or bottoming area. The last signal was a sell 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 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.002 at 1.302. Volume was 65% below average (consolidating) and Bollinger Bands were 32% narrower than normal.

Open High Low Close Volume___
1.300 1.302 1.299 1.302 58,666

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1.30 1.31 1.30
Volatility: 9 10 10
Volume: 131,455 165,934 177,204

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 0.5% above its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect moderate flows of volume out of GBP= (mildly bearish). Our trend forecasting oscillators are currently bullish on GBP= and have had this outlook for the last 4 periods.

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