British Pound: USD/GBP (GBP=X) turns lower from trendline resistance

British Pound: USD/GBP (GBP=X) turns lower from trendline resistance

British Pound: USD/GBP (GBP=X) turns lower from trendline resistance

GBP/USD sold off from a descending trendline yesterday, bringing the wider downtrend into play.

The ability to break below the $1.2799 low will be crucial in determining whether this is the beginning of another leg lower for the pair. Alternatively, watch for a potential break above the $1.2936 level as a signal of impending upside.

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 big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 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 78.4203. This is not an overbought or oversold reading. The last signal was a sell 4 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 57.50. 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 7 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 146.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 9 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 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.015 at 1.303. Volume was 13% above average (neutral) and Bollinger Bands were 16% narrower than normal.

Open High Low Close Volume___
1.287 1.303 1.284 1.303 187,854

Technical Outlook
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.29 1.30 1.35
Volatility: 9 9 9
Volume: 167,924 171,341 159,418

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 3.9% 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 30 periods.

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