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Gbpusd-trading

GBP/USD – Rising trend line intact on price and RSIDespite the three-day losing streak and drop to 1.3235 earlier today, the pair retains bullish bias, given the rising trend line on the daily RSI and price chart has remained intact. A day end close today above 1.3279 (Aug 26 high) would add credence to the bullish view and open doors for a re look at 1.34 handle. On the downside, breach of rising trend line would suggest a top is in place at 1.3445 and the pair could drift lower to 1.31-1.3060 levels.
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GBP/USD – Bearish cloud cover & ‘J curve’ theoryGBP/USD pair’s weak closing yesterday adds credence to the ‘Dark Cloud Cover’ formation noted on the daily chart yesterday. This means the odds of the pair dropping towards 1.3146 (daily 50-MA) have increased. Eyes UK trade data Whether the pair extends losses towards 100-DMA or snaps two-day losing streak also depends to some extent on the UK trade figures for July due today. UK trade numbers has not been a major market mover since 21013 or so, however, the data gains importance now given that markets would be interested to see if the sharp drop in the Pound post Brexit vote has helped UK exporters. J Curve J curve theory suggests that in the initial stages post devaluation, the country’s trade deficit worsens. Eventually foreign importers (buyers) start importing more – respond to the rise in purchasing power, thus leading to improvement in the trade deficit of the home country. Hence, the question today is – have the trade deficit figures worsened in line with J Curve theory… If so will Pound sink or rise on hope the trade deficit would improve significantly going forward If we go by the technical chart – bearish pattern of dark cloud cover – the odds of the pair extending the two –day losing streak are high. Bearish invalidation is seen only above 1.3445 levels.
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GBP/USD – Eyes UK services PMI, losses below Asian session lowUK services PMI for August is seen coming-in at 50.00 as compared to July figure of 47.4. Manufacturing PMI released last week showed a sharp rebound in the activity in August, mainly aided by export orders. The data pushed GBP/USD above 1.33. Friday’s US non-farm payrolls and wage growth figures disappointed expectations and pushed the spot to a session high of 1.3352, however, dollar recovered losses, thus the pair ended at 1.3290. Friday’s close kept resistance at 1.3315 (23.6% of 1.5019-1.2789) intact. Moreover, the level has acted as a strong resistance since mid July. In fact, the spot closed above the same on couple of occasions only to be offered the next day. So the question now is whether the UK services PMI is able to secure a convincing break above 1.3315. Service sector contributes most to the UK GDP hence a better-than-expected figure could indeed result in a day end close above 1.3315, in which case the spot could target 38.2% retracement level of 1.3641 over the short-term. On the lower side, Asian session low of 1.3289 is a strong support. Offering Sterling below 1.3289 is an attractive position as slide below 1.3289 would mark another failure to take out/hold above 1.3315. Short-term averages – 5-DMA and 10-DMA are likely to act as support levels below 1.3289.
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GBP/USD – Needs break above 1.3315Despite the pair’s two-day rally and a bullish break from symmetrical triangle formation, the rejection at 1.3315 (23.6% of 1.5019-1.2789) could result in a minor drop to 1.3250 which could be extended even further to sub-1.32 levels in case the US non-farm payrolls and wage growth numbers beat market expectations. On the higher side, a daily close above 1.3315 would open doors for a sustained rise to 1.3533 (June 29 high). Such a move is more likely if the wage growth figures disappoint expectations.
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GBP/USD – Higher bottom in place…need higher tops now!Daily chart – Bullish break from symmetrical triangle is pretty much a done deal A rebound from 1.3065 on Thursday has put in place a higher bottom formation and we also have a bullish break from symmetrical triangle formation. Thus, one may be compelled to think, the doors are open for a sustained rally in the pair. However, the spot needs to break above 1.3279 (Aug 26 high) as such a move would complete higher tops and higher bottoms formation. Overall, caution is still advised as long as the spot is below 1.3279.
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GBP/USD – Risks falling to 1.30 on broad based USD rallyCable’s failure on Friday at 50-DMA was followed by a sell-off to 1.3129 levels. The move led to inverted hammer formation o the daily chart and also marked a failure to breach symmetrical triangle resistance. Subsequent, drop below short-term moving averages – 5-MA and 10-MA and bearish 5-MA and 10-MA crossover on daily suggests upticks towards 50-DMA hurdle of 1.3181 could be met with fresh offers. Overall, the spot appears on track to test 1.30 levels. A pull back to 50-DMA cannot be ruled out in case Friday’s payrolls and wage growth figure is horribly weak, although August payrolls are usually revised higher in the subsequent months, hence negative reaction in the US dollar may not last long.
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GBP/USD – increased odds of bullish breakThe daily chart on the left hand side shows the pair is stuck in a triangle formation. For last two trading sessions the spot has failed to close above symmetrical triangle hurdle, which may force traders/investors think if the corrective rally has ended. However, take a look at the hourly chart on the right hand side, which shows the spot bounced off from the rising trend line support yesterday. As long as the spot stays above the rising trend line, the odds of a bullish break from daily triangle formation remain high.
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Jackson Hole a dud event, GBP/USD in a triangleA day ahead of Yellen speech at Jackson Hole Symposium, IG’s Josh Mahony informs Tip TV viewers the chief of the world’s most powerful central bank is stuck between a rock and a hard place. Mahony says, Yellen is unlikely to come out massively dovish at the same time does not have enough room to hint at a rate hike. IG's Josh Mahony speaks to Tip TV - www.youtube.com Mahony's view on GBP/USD is somewhat similar to what I stated in my London morning update - GBP/USD: Symmetrical triangle in downtrend Key quotes DXY Weekly time frame: Rotating in big wide range. Doji candle in the current week, Bullish on dollar, current area will see a reversal higher unless Yellen comes out with a super dovish comment, 3-4 weeks of upside ahead EURUSD: Short bias. Trend is downward. Short-term double top, looks like we might have seen the trend change yesterday GBPUSD: Triangle pattern at the moment, not too keen to buy right now, we will see it turn lower and resistance will hold. (Over here, host Rastani adds that Commercial hedgers are net long) AUDUSD: Massive trendline since 2013 has come into play. Stochastic is starting to roll over, thus there is room for significant downside in coming weeks, needs to break April/May peak to avoid bearish fall USDJPY: Dead pair as of now. We broke above 107, which is bit of a heads up, could be a hint that current trend might be over
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GBP/USD – symmetrical triangle in downtrendPair’s three-day winning streak and a failure to cut through symmetrical triangle resistance on closing basis yesterday followed by a similar failure in the Asian session today suggests the spot is likely to see a corrective move lower to 5-DMA level of 1.3173. The daily RSI has turned bullish for the first time post Brexit vote, thus we could see dip to 1.3173 met by fresh bids. On the higher side, a bullish break on day end closing basis would signal continuation of the rally from post Brexit low. On the way higher, the spot could face stiff resistance at 1.3315 and 1.3360.
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GBP/USD Forecast: Rebound from 5-DMA likelyCable breached Aug 19 high of 1.3185 and rose to 1.3210 levels on Tuesday before deflating to 1.3176 levels in early Europe today. Pair’s bullish day end close above Aug 19 high of 1.3185 adds credence to the rebound from 1.30 seen in the last week and indicates prices could test falling trend line hurdle of 1.3240. Dip to 5-DMA of 1.3149 could be met with fresh bids. A day end close above 1.3240 would open doors for 1.3315 (23.6% of 1.5019-1.2789).
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GBP/USD – Eyes inverse head and shoulder necklineCable dipped to a low of 1.3034 yesterday before broad based USD selling ensured a quick recovery of losses and a move higher to 1.3135 levels. Yesterday’s gains have been extended in Asia, with the bird now hovering around 1.3164 levels. Eyes CBI total trends figure Confederation of British Industry (CBI) Trends Total Orders number for August is seen coming-in at -10 as opposed to previous figure of -4. This means another month of weak manufacturing activity and the blame once again would be put squarely on the shoulders of Brexit vote. However, it is worth noting that manufacturing has been in recession well before the Brexit vote happened. Nevertheless, weak data would reinforce expectations that BOE would hit the zero lower bound by year end. Consequently, Cable could feel the heat, although for that the figure would have to be worse than the consensus estimate. A Positive surprise could strengthen the pace of the corrective rally in Cable. Technicals – Inverse Head and Shoulder on hourly The neckline resistance is seen around 1.3220 levels Pair’s rebound from Friday’s low of 1.3023 if followed by a break above 1.3185 (Aug 19 high) would open doors for a test of inverse head and shoulder neckline of 1.3220 Bulls should watch out for a failure at 1.3185 as such a move if followed by a violation at the daily low of 1.3128 levels would open doors for a more pronounced sell-off to 1.3050 levels A day end close above 1.3220 would expose 1.3315 levels
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GBP/USD – Sell on rise, unless 1.3056 is breachedDespite Cable’s recovery from the low of 1.2860 to 1.2913 the overall picture remains bearish as long as the resistance at 1.3056 (July 26 low) isn’t breached. Failure at hourly chart resistance of 1.2955 followed by a drop below 1.29 levels would open doors for a re-test of 1.2789 (post Brexit low). Focus on CPI numbers UK CPI is expected to show cost of living as measured by consumer price index remained unchanged t annualized rate of 1.4% in July. Don’t be surprised if we have a higher print; courtesy of weak Sterling. Traders will keep an eye on UK CPI, however, trading decisions are more likely to be influenced by US CPI number, which is see dropping slightly in July.
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GBP/USD – Run on the Pound unlikelyHow low the British Pound can go? Major investment banks are calling for a drop to 1.20 levels by turn of the year. A significant minority also expects Pound to rally to 1.39-1.40 levels over the next six months or so. Jeremy Stretch, Head of G10 FX at CIBC was on our Finance Show today explaining why he believes Cable could go down to 1.25 levels, but a run on the Pound is unlikely We have heard the phrase run on the bank….Run on the Pound is a crash like sell-off. Stretch believes – “Question is what will be the next catalyst for a fresh sell-off in Pound. Markets believe BOE would do more expansion of its balance sheet so it could trigger some fall. Further bearish pressure could come as we move from survey data due to actual data – retail sales, trade balance, industrial production, labor data. So Cable could go down to 1.25, but don’t see capitulation of Pound.” Watch our segment with Jeremy Stretch title “Interest rate cut strategy nearing end game, run on pound unlikely – CIBC” here - www.youtube.com Technicals Monthly chart looks scary…we have a large multi decade head and shoulder breakout, however, the money flow index is down to 30 levels. Over the last 40 years or so, money flow indicator fell below 30 only thrice. Other times, it recovered from near 30 levels, which means the Pound could go higher from here.
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GBP/USD – Looking southwardsCable’s retreat to sub 1.30 levels after a bearish break from symmetrical triangle formation on the daily chart followed by a failed attempt to hold above 1.3056 (July 26 low) on Wednesday followed by a retreat again to 1.30 levels suggests it is only a matter of time before the bird falls to 1.2955-1.29 levels. On the higher side, a daily close above 1.3056 would signal short-term bearish invalidation, although bulls are likely to come-in only above 1.3315 (23.6% of 1.5019-1.2789).
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GBP/USD – Bearish bias intact, Eyes 1.2789Despite Cable’s erratic move from the low of 1.2980 to 1.3090 the bias remains bearish, given the daily close below 1.3056 on Monday and the downward sloping money flow index. On the hourly time frame, the money flow index has turned lower from overbought territory and the spot is now struggling to hold above 1.503 (5-DMA) levels. A break below daily low of 1.2993 appears likely in which case the spot may extend the slide to 1.29323. A daily close today below 1.30 handle would confirm the spot is heading towards port Brexit low of 1.2789. On the higher side, only a breach of 10-DMA could signal short-term bearish invalidation.
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GBP/USD – Re-test of post Brexit low likely Strong US data today only widens the growing divergence between the Fed and the BOE, thus the GBP/USD pair is more likely to breach 1.40 handle and re-test post Brexit low of 1.2789. On charts, we have had a bearish symmetrical triangle breakout and a daily closing today below 1.3056 (July 16 low) would add credence to the bearish fundamental story. On the higher side, only a day end closing above 1.3363 would indicate bearish invalidation.
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GBP/USD – Down but not outBank of England cut rates and caught markets off guard by increasing the QE program. The result was a drop in GBP across the board. Cable retreated from the pre-BOE high of 1.3345 to a session low of 1.3111. At the time of writing, the pair traded around 1.3135. Daily chart – Bearish Symmetrical triangle breakout, but bullish invalidation only below 1.3056 Pair’s failure to hold/take out above 1.3363 (50% of 2007 high-2009 low-2014 high) earlier this week and a drop from the high of 1.3345 to 1.3111 is demoralizing for the bulls, but still bullish invalidation is seen only in case of a daily closing below 1.3056, in which case the post Brexit vote low of 1.2789 stands exposed. A daily closing below 1.3074 would also indicate bearish break from symmetrical triangle, although bears would need a break below 1.3056 levels. As long as 1.3056 holds, the probability of a move back to 1.3363-1.35 remains intact. Note: in case we close below 1.3174 today, then the spot may find itself stuck in the range of 1.3315 (23.6% of 1.5019-1.2789) - 1.3056 levels for the next few days.
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GBP/USD – Re-test of 50% Fib level at 1.3363 likelyCable’s daily closing above 1.3315 (23.6% Fibo retracement of 1.5019-1.2789) on Tuesday adds credence to the view that a short-term bottom has been made at 1.2789 and the technical correction is likely to continue, but reckon the resistance at 1.3363 (50% Fibo expansion level of Nov 2007 high – Jan 2009 low – July 2015 high) would remain intact ahead of tomorrow’s Bank of England (BOE) rate decision. A day end closing above 1.3363 would open doors for 1.3641 (38.2% of 1.5019-1.2789). On the lower side, only a daily closing below 1.3055 (July 16 low) would signal the corrective rally has ended.
by TipTVFinance