British Pound: USD/GBP (GBP=X) volatility is expected to increase further

British Pound: USD/GBP (GBP=X) volatility is expected to increase further

British Pound: USD/GBP (GBP=X) volatility is expected to increase further

Next week the UK Parliament will vote on a series of Brexit Bills which will decide the short- and long-term future relationship between the UK and the EU. On Tuesday, PM May’s current Brexit Bill is re-presented to the House and is likely to be rejected again, although the margin will be slimmer than the sizeable 230 vote defeat in mid-January. If this is the case, on Wednesday the House will vote on whether a No Deal Brexit should be left on the negotiating table, leading the way to Article 50 extension vote on Thursday.

As we stand, the EU remains unwilling to change any part of the Withdrawal Agreement, notably the Irish backstop, although both parties will continue talks over the weekend as both sides strive to avoid a potentially ruinous No Deal Brexit. While nothing has changed as we write, by this time next week there will be greater clarity on this long-running saga.

The domestic Economic data calendar is dominated by a raft of releases on Tuesday, including trade balance figures and industrial and manufacturing production numbers. While these remain important, the Brexit vote in the evening will dominate market thoughts.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.32.

The projected lower bound is: 1.28.

The projected closing price is: 1.30.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 23 white candles and 25 black candles for a net of 2 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 16.0983. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 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 46.36. 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 6 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 -81. This is not a topping or bottoming area. The last signal was a sell 5 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 sell 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.007 at 1.301. Volume was 6% below average (neutral) and Bollinger Bands were 35% wider than normal.

Open High Low Close Volume___
1.308 1.311 1.299 1.301 171,634

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

Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.30 1.30
Volatility: 10 10 10
Volume: 178,113 166,385 178,425

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 0.2% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 9 periods.

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