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Gbpusd-trading

GBP/USD – watch out for bullish hourly 50-MA and 100-MA crossoveResistance – 1.3407 (hourly 100-MA), 1.35, 1.3567 (23.6% of 1.5019-1.3119) Support – 1.3354, 1.3286, 1.3226 Pair’s retreat from the NY session high of 1.3533 if followed by an hourly closing below the hourly 50-MA would open doors for a re-test of 1.3286 levels. The hourly RSI has dipped below 50.00 and that adds credence to the possible drop to 1.3286-1.32 levels. However, traders need to watch out for the bullish crossover between the hourly 50-MA and hourly 100-MA. Such a move would open doors for a rise to 1.3567 levels. Note, the bullish crossover following a bullish break from falling channel and bullish price RSI divergence would signal a short-term bottom is in place at 1.3119 levels.
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GBP/USD - Closes-in on 23.6% Fibo as anticipatedResistance – 1.3567 (23.6% of 1.5019-1.3119), 1.36, 1.3660 Support – 1.3419, 1.3309 (hourly 50-MA), 1.3296-1.3274 Pair’s rebound from the hourly 50-MA has reinforced our view that it could be heading to 1.3567 (23.6% of 1.5019-1.3119). A day end closing above the same would add credence to the technical correction and indicate a short-term bottom is in place at 1.3119. The pair then could eye 38.2% 1.3848, which is usually the case each time 23.6% Fibo is breached. On the lower side, bulls need to watch out for an hourly closing below hourly 50-MA (now seen at) 1.3309, in which case a re-test of 1.3296-1.32 appears likely.
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GBP/USD – Odds of bullish move to 23.6% Fibo intactResistance – 1.3419, 1.35, 1.3567 Support – 1.3294, 1.3226, 1.3119 Pair’s break above hourly 50-MA following a bullish break from falling channel and bullish price RSI divergence indicates the spot could be heading higher to 1.3567 (23.6% of 1.5019-1.3119). The bird consolidated just above hourly 50-MA in Asia indicating a base building before further upside opens up. On the other hand, failure to extend gains above hourly 50-MA followed by a break below hourly chart support of 1.3226 could yield re-test of 1.3119.
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GBP/USD update - 23.6% Fibo stands exposedPair's breached hourly 50-MA as expected in the London morning update here. The spot clocked a high of 1.3418 and now trades around the hourly 5-MA level of 1.3361 Outlook Pair's break above hourly 50-MA after bullish price-RSI divergence and bullish break from falling channel resistance has left the doors open for an extension of gains to 1.3567, which is the 23.6% Fibo retracement of the post the 'Brexit' fall - 1.5019-1.3119. Daily closing above 1.3567 would indicate a short-term bottom is in place at 1.3119 and the pair could move to 38.2% Fibo support. On the other hand, failure to sustain above hourly 50-MA if followed by a break below 1.3296 (June 23 low) would open doors for a re-test of 1.3119.
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GBP/USD – Bullish price-RSI divergenceResistance - 1.3352, 1.3427, 1.35-1.3567 Support – 1.3296, 1.3226, 1.3119 Pattern – Bullish break from falling channel on 15-min chart & bullish price RSI divergence on hourly Pair’s bullish break from falling channel on 15-min chart coupled with a bullish price RSI divergence indicates a corrective rally may have resumed and prices could test 1.3427 (hourly 50-MA). If taken out, the pair could extend gains to 1.35-1.3567 (23.6% of Brexit fall). Only a day end closing above 1.3567 would signal a short-term bottom is in place at 1.3119. On the other hand, a failure to take out/sustain above 1.3352 (hourly chart resistance) followed by a break below 1.3296 would shift risk in favor of a re-test of yesterday’s low of 1.3119.
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GBP/USD – Head and Shoulder and Fibo expansion playResistance – 1.35, 1.3654, 1.3835-1.3867 Support – 1.3304, 1.3226, 1.30 Monthly chart pattern – Head and Shoulder Neckline level – 1.3226 Heightened uncertainty post Brexit is keeping the pair on a weaker footing. Cable is flirting with 1.34 handle in early Europe. Prospects remain for a intraday rebound to 1.35 unless head and shoulder neckline level of 1.3226 is breached, in which case the risk would shift in favor of a drop to 1.40. A rebound from 1.3226 (as seen on Friday) followed by a day end closing above 1.35 would signal a short-term bottom has been made on Friday and a technical correction could yield 1.3835 (previous cyclical low) – 1.3867 (78.63% of Fibo exp).
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A thought on GBP/USDWires are busy reporting the Brexit crash in the financial markets across the globe. On forex markets, the first line is common - Pound slides/Pound drops to 30-year low ...etc. etc. However, Cable hasn't really crashed. The pair traded at 1.40 last Thursday. So at the current price of 1.37, Able is down just 300 pips. Note that rally in Cable from last Thursday's low of 1.4013 o so was on hopes of Bremain. If there was Bremain we could have anyways come down to 1.45 in coming days due to profit taking and possible rise in Fed rate hike bets. Hence, today's fall though unprecedented, does not represent panic. Markets just wiped out Bremain hope rally move (1.50-1.40) and then priced-in Brexit (1.50-1.3226). This does not mean we are going higher from here. However, I wish to bring to notice that it is not a Cable meltdown. There is a high possibility that Cable could indeed move back above 1.4 if the monthly closing is above 1.3478. The overall outlook remains bearish as long as the monthly falling trend line remains intact. There are number of political risks that could unfold going forward and the area around the falling trend line could see a sellers come-in. If taken out on at least weekly closing basis, the risk would shift in favor of a more sustained rise.
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GBP/USD - Will it see a bullish break from inv head and shoulderCable is running higher in anticipation of 'remain' vote victory. The result the pair is trading well above the inverse head and shoulder neckline seen on the daily chart at 1.4830. However, it is premature to call a bullish break here, given the daily close needs to be above 1.4830. Even if we do have a day end closing above 1.4830, it is slightly risky to expect a fresh rally, given the conditions under which the bullish break happened. Note the market is pricing-in a 'remain' vote victory by having a look at the polls. This means there is a scope for "buy the rumor, Sell the fact" kind of trade. Hence, the day end closing could be below 1.4830 or the breakout could turn out to be a 'fakeout' tomorrow/next week.
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GBP/USD – Major trend line resistance being put to testResistance – 1.4842, 1.4883, 1.4951 Support – 1.4770, 1.4739-1.47, 1.4636-1.4627 Pair is flirting with a larger falling trend line resistance (drawn from July 2014 high – Aug 2015 high). A weekly closing above the same would signal a major trend reversal and open doors for a break above 1.50 levels. However, caution is advised since markets have priced-in ‘Bremain’ to a major extent and hence we may either see a rejection at trend line or a failed breakout, in which case the prices could fall back to 1.4636 levels. A daily closing below 1.4636 would be bearish.
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GBP/USD – Bearish pinbar at critical resistanceResistance – 1.4706, 1.4770-1.4782, 1.48 Support – 1.4642, 1.4616, 1.4540 Pair’s run up to a high of 1.4782 followed by a fall back to below previous high of 1.4770, trend line (black) level and 200 day sma led to formation of bearish pinbar candle on the daily chart. The spot has inched higher in early Europe to trade around 1.4690 and is looking to take out trend line (black) resistance. Pair’s failure to do so if followed by a drop below 200-DMA and a subsequent move below Asian session low of 1.4642 would add credence to bearish pinbar formation and open doors for a drop to major support at 1.4540. On the higher side, a day end closing above 1.48 is required to convince bulls about the sustainability of the current rally.
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GBP/USD – Stuck at trend line resistanceResistance – 1.4710, 1.4770, 1.4806 Support – 1.4686, 1.4662, 1.4636 Pair is trading above its daily 200-day moving average for the first time since November 2015. Failure to take out 1.4710 (black trend line resistance on daily) on hourly timeframe followed by a break below 200-MA on daily at 1.4686 would open doors for a re-test of 1.4636 (38.2% of Fibo retracement of July 2015 high-Feb 2016 low). On the higher side, resistance at 1.4770 could be put to test if resistance at 1.4710 is breached on hourly closing basis.
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GBP/USD - Breakout may happen this weekOn the weekly chart, we can see two falling trend lines - Blue and red. At 1.4660, the spot is back above blue trend line, but still needs to take out red rising trend line. Note that blue trend line was breached quite a few times on day end closing basis, but on the weekly closing basis the resistance stayed intact. However, the breakout may happen this week. Popular opinion is that Uk staying in EU would boost Pound and gilt yields and vice versa. Either we would have a clear breakout or a failure which would indicate sell-off.
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GBP/USD - Pick broader rangesReferendum is just three days away and there is no point in trying to take sides on intraday basis. Instead it would be relatively easier to pick broader ranges in the pair and then go with the flow after breakouts or failed attempts. As of now the broader range on the daily chart is 50-MA (1.4441) and 200-MA (1.4689). On a larger scheme of things, the range could be again 200-MA (1.4689) and rising trend line support at 1.4346. Cable - pick broader range
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GBP/USD – Erratic trading continues… Cable is all over the place and there is little clue on the charts about what could happen, given we are just one week away from referendum. Cable should continue to see erratic moves today. Resistance – 1.4302, 1.4330, 1.4348, 1.4413, 1.4432 Support – 1.4192, 1.4131, 1.4056, 1.4005, 1.39 Traders could simply go with the flow and this jotting down key technical levels is all that is needed to trade the highly volatile and volume-thinned Cable.
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GBP/USD – Corrective rally likely, losses seen below 1.4114Resistance – 1.4192, 1.4243, 1.4302 Support – 1.4114-1.4090, 1.4056, 1.4030 Pair’s repeated failure to sustain below 1.41 amid rising bottoms on hourly RSI indicates prices could see a corrective rally to 1.4192 (61.8% of 1.3835-1.4770). A violation there would expose 1.4243 (5-DMA). On the lower side, a failure to take out/near hourly 50-MA followed by a break below 1.4090 would reinforce bears and shift risk in favor of a drop to 1.4030 levels. Economic data release in the UK – employment and average weekly earnings – is once again likely to be ignored in the wake of Brexit uncertainty.
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GBP/USD - Break below 1.4114 could prove to be fatalCable is trading around 1.4110 levels. this is bad news for people expecting a recovery in the pair as a hourly closing below 1.4114 would indicate failure to bullish price-RSI divergence seen on the hourly chart. In the current scenario, a single hourly candle could result in a 100-pip drop. Hence, a 15-min closing below 1.4114 could be a sign the bullish divergence has failed. In such a case, pair could drop to 1.4079-1032 levels. On the higher side, an hourly closing above 1.4189 is required to open doors for further recovery in the pair.
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GBP/USD – UK CPI data could be ignoredUK data calendar boasts of monthly CPI release. The annualized figure is seen rising 0.4% y/y and 0.3% m/m. Core is seen rising 1.3% y/y. However, the improvement in the CPI release could be ignored as Cable is at the mercy of Brexit polls. Four polls released yesterday put UK on course of Brexit. The biggest blow was delivered by the Sun; UK’s highest selling newspaper, after it backed Brexit and published a front page support - Outside the EU we can become richer, safer and free at long last to forge our own destiny -- as America, Canada, Australia, New Zealand and many other great democracies already do,” the newspaper said. “If we stay, Britain will be engulfed in a few short years by this relentlessly expanding ­German dominated federal state. Brexit fears are likely to dominate the market sentiment and keep Sterling under pressure, although polls by themselves are volatile and tend to switch sides every other day. Resistance – 1.4252, 1.43, 1.4330 Support – 1.4115, 1.4079, 1.4005 Cable’s failure to dip below previous day’s low of 1.4115 would open doors for a snap back to 1.42-1.4266 levels, given the pair formed Doji candle on the daily charts yesterday. On the other hand, an hourly closing below 1.4115 would shift risk in favor of a drop to 1.4079-1.40 levels.
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GBP/USD – Bearish break in run up to Brexit referendumResistance – 1.4284, 1.4352, 1.4514, 1.4627/1.4635 Support – 1.42, 1.4159, 1.4079, 1.40 Five days ago I had written a post on GBP/USD titled “GBP/USD – Tale of two 23.6% Fibo levels” where I had talked about the pair being restricted to range of 1.4627 (23.6% of 1.7191-1.3835) and 1.4330 (23.6% of 1.5930-1.3835) for six weeks or so. Weekly highs above 1.4629 were seen but on weekly closing basis the pair did not close above the same. On the other hand, sell-off found support around 1.4330 levels. However, today, the closing is well below 1.4330 levels. It means we have witnessed a bearish weekly close below 1.4330. On the daily chart, the rising trend line (black) has been breached as well. The bearish closing has happened following the pair’s failure to take out larger falling trend line (red) resistance earlier this week. Hence, I conclude we have had a bearish break in run up to Brexit. Note, the technical move detailed above is bearish but volumes are quite thin and volatility is likely to remain high. Hence, bears are advised to remain cautious and respect their stops. Also note the strong resistance at 1.4627 (23.6% of 1.7191 – 1.3835) almost coincides with 1.4635 (38.2% of 1.5930-1.3835). Hence, technical view would turn bullish only in case of a daily/weekly closing above 1.4635 levels.
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GBP/USD – Watch out for a rebound from daily 50-MAResistance – 1.4482, 1.4556, 1.46 Support – 1.4436, 1.44, 1.4360 Pair’s failure to take out larger falling trend line resistance on Wednesday followed by a negative closing yesterday despite absence of fresh Brexit polls and a better-than-expected UK manufacturing and trade deficit data indicates the pair in on track to test daily 50-MA level of 1.4436 and 1.44 levels. However, bears should watch for a rebound from/recovery back above daily 50-MA of 1.4436 followed by a break above 1.4466 (daily high) as such a move would shift risk in favor of a rise to 1.4514 levels. On a larger scheme of things, the pair remains trapped in larger falling trend line hurdle and a rising trend line (drawn from 1.3835 and 1.4005).
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GBP/USD - Bears eye daily 50-MA supportResistance - 1.4584, 1.4660, 1.47 Support - 1.4427, 1.4355, 1.43 As pointed out in previous day's morning newsletter, Cable struggled to take out larger falling trend line resistance and ended the day 1.45 levels. The failure to take out trend line resistance happened despite upbeat manufacturing data and absence of fresh Brexit polls. The daily RSI has breached the rising trend line as well and is now pointing to weakness in the pair. Hence, Cable could slide to 1.4450-1.4427 (daily 50-MA). A violation there would expose daily 100-MA level of 1.4353. (another trend line support stands at 1.4355). On the higher side, a clear day end closing above falling trend line would provide a window of opportunity for bulls, although as discussed in earlier GBP/USD posts, a week closing above falling trend line is what is needed to convince bulls regarding further upside in the pair.
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GBP/USD update – Trend line resistance is a tough nut to crackUK manufacturing production for April jumped 2.3%, contradicting the drop in the activity as highlighted by manufacturing PMI released on May 3rd. In the wake of a strong data and amid absence of fresh Birexit polls, GBP/USD found bids around 1.4550 and jumped to a high of 1.4600, before retreating slightly to trade around 1.4580 at the time of writing. US session outlook Resistance – 1.4590-1.46, 1.4660, 1.47 Support – 1.4530, 1.4468, 1.44 The larger falling trend line resistance is a tough nut to crack as discussed in the morning outlook. The resistance stands at 1.4590-1.46 and Cable’s failure to take out the same in Europe despite strong data and absence of Brexit polls could lead to a fall back to 1.4550-1.4530 levels. A break below 1.4530 would shift risk in favor a drop below 1.45 levels. On the higher side, 1.4660 stands as a strong resistance and only a day end closing above the same would add credence to breach of falling trend line resistance.
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GBP/USD – Play the trend lines, Eyes UK manufacturing dataLiquidity is thin and could get worst as we move closer to Brexit referendum. Off late, Sterling has stopped responding to UK economic data releases and Brexit polls appear to have taken the center stage. Resistance – 1.4590-46, 1.4660, 1.47 Support – 1.4530, 1.4468, 1.44 Cable currently trades around 1.4550 levels. The falling trend line (red) has acted as a strong support since Q3 2015. Moreover, day end closing above the trend line has been met with fresh selling, thus ensuring the weekly closing was always below the trend line level. Hence, a break above trend line resistance seen today at 1.4590-1.46 should be treated with caution. Nevertheless strong UK data and absence of fresh polls could make life easier for bulls to attempt a break above 1.46 and move towards 1.4660 levels. On the other hand, a failure to take out 1.4590-1.46 followed by a drop below daily low of 1.4530 would shift risk in favor of a slide to 1.4450 levels. Note, the daily RSI too appears to have turned the corner. The rising bottoms is history and the indicator is now showing falling tops. Thus, Cable’s failure to take out 1.4590-1.46 followed by break below 1.4530 could trigger a sharp fall. On a larger scheme of things, support of rising trend line (black) needs to breached in order to signal bullish invalidation. UK Manufacturing production could disappoint Manufacturing production is expected to have stalled in April, following a 0.1% m/m rise in March. However, the actual figure could contract if we take into account the dismal April manufacturing PMI reading. The Markit/CIPS UK Manufacturing PMI had dropped to 49.2 in April from March figure of 50.7. New export orders had dropped for fourth straight month in April as well. Hence, we might see a miss on the estimates, which could weigh over Sterling, although sharp losses are unlikely, given the bird had suffered sharp losses on May 3rd (when dismal April PMI was released).
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