British Pound: USD/GBP (GBP=X) Tries To Rebound
GBP/USD is in a rebound mode following the steep fall of the last week which was driven by mass flight to safety and the resulting strength of the U.S. dollar.
Over the weekend, the U.S. tried to pass a new coronavirus aid package but political differences between Democrats and Republicans prevented the bill from being signed.
The world is eagerly awaiting for the ultimate content of the U.S. coronavirus aid package, which could include measures worth more than $1 trillion. There’s increased urgency for these measures since nearly one third of Americans have received orders to stay at home on Sunday.
Investors and traders will be able to evaluate the initial economic impact of virus containment measures this week, as the U.S will report important economic data.
Manufacturing PMI and New Home Sales are due to be reported on Tuesday, March 24, followed by Durable Goods Orders on March 25 and Initial Jobless Claims on March 26.
The Initial Jobless Claims number is of special interest since it will show the scope of layoffs due to coronavirus-related measures. The previous data showed that Initial Jobless Claims were 281,000, while the consensus for this week’s number is 775,000. I’d note that some analysts expect that the Initial Jobless Claims number will easily surpass 1 million.
Meanwhile, the Bank of England is set to make its interest rate decision on Thursday, March 26. Previously, the Bank of England cut the interest rate from 0.75% to 0.25% and then to 0.1% in a series of emergency meetings. No further cut is expected at Thursday meeting, but the Bank will reveal its evaluation of the current situation, which is very important for GBP/USD.
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: 1.19.
The projected lower bound is: 1.13.
The projected closing price is: 1.16.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
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 22.7186. 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 25.31. This is where it usually bottoms. 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 sell 70 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 -93. This is not a topping or bottoming area. The last signal was a buy 0 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 sell 8 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.007 at 1.162. Volume was 83% below average (consolidating) and Bollinger Bands were 401% wider than normal.
Open High Low Close Volume___
1.155 1.164 1.151 1.162 18,354
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.20 1.28 1.27
Volatility: 27 17 12
Volume: 129,995 114,531 111,193
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 8.3% 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 moderate flows of volume out of GBP= (mildly bearish). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 52 periods. Our momentum oscillator is currently indicating that GBP= is currently in an oversold condition.