British Pound: USD/GBP (GBP=X) UK Services PMI Falls Into Contraction
After briefly stabilizing, the UK service sector fell back into a decline with a print of 49.3 in the PMI reading for November. The data points to staggering growth in the fourth quarter as businesses wait to gain further clarity on the election and Brexit. IHS Markit’s data signals a quarterly decline of 0.1% in GDP growth.
The data release did not have much of an impact on the exchange rate which is rallying following a notable technical break in the early week.
The pound to dollar exchange rate had been consolidating within a range for about five weeks. Yesterday, some upward movement lead to a bullish break of a technical pattern. Follow up is seen in the pair today and as a result, it trades at a level not seen since May 2018.
The upward price pressure is mainly attributed to growing expectations of a Tories victory after last week’s well-respected YouGov poll showed a 10 point lead.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.33.
The projected lower bound is: 1.29.
The projected closing price is: 1.31.
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 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 22 black candles for a net of 4 white 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 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 90.8108. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 11 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 70.23. This is where it usually tops. 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 31 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 285.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 11 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 buy 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.011 at 1.310. Volume was 11% below average (neutral) and Bollinger Bands were 43% narrower than normal.
Open High Low Close Volume___
1.299 1.312 1.298 1.310 99,202
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.29 1.28 1.27
Volatility: 8 10 9
Volume: 100,062 105,639 130,874
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 3.2% above 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 7 periods. Our momentum oscillator is currently indicating that GBP= is currently in an overbought condition.