British Pound: USD/GBP (GBP=X) to continue rising but risks a short-term correction

British Pound: USD/GBP (GBP=X) to continue rising but risks a short-term correction

British Pound: USD/GBP (GBP=X) to continue rising but risks a short-term correction

The Pound-to-Dollar rate is set to begin trading around 1.2485 at the beginning of the new week after closing the previous one around 1.68% higher on Friday and studies of the charts suggest the pair has established a new uptrend that could take it higher in the days ahead. 

The daily chart shows how the pair broke through resistance at the 50-day moving average (MA) and continued its uptrend higher last week. A continuation of this move is quite possible over the medium term, likely taking the market to a target at 1.2730, where a tough band of resistance composed of some major moving averages and a key historic high is situated. The daily chart is used to analyse the medium-term trend, which is the next month of price action.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.27.

The projected lower bound is: 1.23.

The projected closing price is: 1.25.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend (which appears to be the case with FOREX GBP=) this pattern implies an end to the rally as the bulls appear to have exhausted themselves.

During a downtrend the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.

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 89.1438. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 2 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 65.29. 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 22 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 149.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 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 22 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.001 at 1.249. Volume was 97% below average (consolidating) and Bollinger Bands were 16% wider than normal.

Open     High      Low     Close     Volume___
1.250 1.251 1.247 1.249 4,228
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.23 1.23 1.27
Volatility: 11 10 9
Volume: 114,325 116,799 148,450

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 1.9% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 15 periods.

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