USD/GBP (GBP=X) heading for a test of the 200-hr SMA ahead of the FOMC

USD/GBP (GBP=X) heading for a test of the 200-hr SMA ahead of the FOMC

USD/GBP (GBP=X) heading for a test of the 200-hr SMA ahead of the FOMC

GBP/USD entered NY heavy, falling from 1.3366 to 1.3308 the low after the market felt that the CPI data, slightly lower than forecasts but unchanged from April’s reading, was not enough for the BoE to think about raising rates in August. UK CPI came in at +2.4% YY vs 2.5% expected.

However, the dollar has been on the backfoot for the best part of the European session and there was a subsequent turnaround where cable marched the bears all the way back to 1.3377 on broad-based dollar weakness ahead of today’s FOMC showdown where markets expect a 25bps rate hike.

The 200-hr SMA is located at 1.3381 and the 100-hr SMA comes in at 1.3387. These guard a run to the top of the descending channel at 1.34 the figure. The double top highs of the same channel are located at 1.3420/25. Beyond there, bulls will have eyes for the 200-D SMA at 1.3594. The convergence of the 200-D SMA and 1.3583/1.3600 tops comes as the upside target while the 1.3708 level at the 50% Fib of 1.3040-1.4377 remains compelling on the wide. To the downside, analysts at Scotiabank argued that with losses below 1.3300 near-term, this would point to losses picking up more quickly.  Eyes would be on 1.3204 recent lows of 1.3040, as the Nov 3 low.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1.35.

The projected lower bound is: 1.32.

The projected closing price is: 1.34.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 23 white candles and 26 black candles for a net of 3 black candles.

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 40.6031. 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 41.85. 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 9 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 44. This is not a topping or bottoming area. The last signal was a buy 10 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 9 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.001 at 1.338. Volume was 95% below average (consolidating) and Bollinger Bands were 55% narrower than normal.

Open High Low Close Volume___
1.337 1.338 1.337 1.338 8,044

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.34 1.37 1.36
Volatility: 5 7 9
Volume: 151,196 157,248 146,654

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 1.6% below 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 3 periods.

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