GBPUSD: Megaphone pulling back. Chance to buy the dip.GBPUSD is trading inside a Bullish Megaphone pattern after the March 8th bottom with the 1D timeframe still bullish (RSI = 61.970, MACD = 0.007, ADX = 32.900) despite the fact that the price has been on a pullback since the June 16th high.
This is because the technicals were previously overbought and the harmonization process is longer. Technically when the RSI turns neutral it will start being a buy opportunity again. The closer to the 1D MA50, which is now at the bottom of the Megaphone pattern, the better.
We will buy and target the top of the Megaphone again (TP = 1.3000) before it eventually tests the R1 (1.3090) after the next pullback.
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Gbp-usd
GBPUSD potential bounceAfter price expanded aggressively to the upside, it left behind an unmitigated imbalance. It then preceded to retrace back down, forming liquidity above an established demand zone that was formed before the previous expansion. It could potentially use this liquidity, with the aid of the demand zone, to fuel its move further upwards to take out liquidity that was formed at the top as well.
GBPUSD Potential DownsidesHey Traders, in today's trading session we are monitoring GBPUSD for a selling opportunity around 1.27400 zone, GBPUSD was trading in an uptrend and successfully managed to break it out. Currently is in a correction phase in which it is approaching the retrace area at 1.27400 support and resistance zone.
Trade safe, Joe.
Target reached! GBPUSD ReviewPrice bounced off the 1.2683 support we identified and rose nicely to our take profit target at the 1.2832 level. In this review, we touch on why we used the 1.2832 level and not the swing high at 1.2850 - a lot of this is down to trade management and take profit placement.
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GBPUSD, H4 | Bounce off major supportWe're seeing price approach a major support level at 1.2680 which is a historically strong support level. It also lines up with Fibonacci confluence of 38%, 50% and 100% (projection). On top of that, there's a nice bit of bullish ichimoku cloud holding prices up.
If price were to bounce from here, we could see it inch up towards the 1.2832 level which is the recent swing high.
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The speaker(s) is neither an employee, agent nor representative of FXCM and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of FXCM or any form of personal or investment advice. FXCM neither endorses nor guarantees offerings of third party speakers, nor is FXCM responsible for the content, veracity or opinions of third-party speakers, presenters or participants.
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Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you.
Forex Capital Markets Limited (www.fxcm.com):
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXCM EU LTD (www.fxcm.com):
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXCM Australia Pty. Limited (www.fxcm.com): **
Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763), please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com
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Losses can exceed deposits.
GBPUSD Potential DownsidesHey Traders, In anticipation of tomorrow's trading session, we have identified GBPUSD as a currency pair to closely monitor for a potential selling opportunity. GBPUSD is currently trading within a persistent downtrend, and at present, it is undergoing a correction phase. This correction phase is noteworthy as the currency pair is gradually approaching a significant support and resistance zone situated at the 1.29 level. The 1.29 zone holds substantial importance, as it aligns with the major trend and has historically demonstrated significant price reactions. Given these factors, we will be diligently observing GBPUSD's price action to evaluate whether the conditions align for a favorable selling position. Our analysis will focus on the development of the correction phase and its interaction with the 1.29 zone, as this will provide valuable insights into potential future price movements. By closely monitoring these dynamics, we aim to capitalize on a potential retracement or resumption of the downtrend.
Trade safe, Joe.
GBPUSD, H4 | Potential Bearish Reversal?GBPUSD is seeing major resistance at the 1.2577 level which is an overlap, 100% projection and is seeing bearish divergence vs price. A reversal from here could see prices being pushed all the way down to 1.2477.
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The speaker(s) is neither an employee, agent nor representative of FXCM and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of FXCM or any form of personal or investment advice. FXCM neither endorses nor guarantees offerings of third party speakers, nor is FXCM responsible for the content, veracity or opinions of third-party speakers, presenters or participants.
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Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you.
Forex Capital Markets Limited (www.fxcm.com):
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXCM EU LTD (www.fxcm.com):
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXCM Australia Pty. Limited (www.fxcm.com): **
Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763), please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com
FXCM Markets LLC (www.fxcm.com):
Losses can exceed deposits.
GBPUSD Potential DownsidesHey Traders, in today's trading session we are monitoring GBPUSD for a selling opportunity around 1.25100 zone, GBPUSD is trading in a downtrend and currently seems to be in a correction phase in which it is approaching the major trend at 1.25100 resistance area.
Trade safe, Joe.
GBPUSD continues in mixed and volatile moves.GBPUSD - 24h expiry
Although the bears are in control, the stalling negative momentum indicates a turnaround is possible.
This is positive for short term sentiment and we look to set longs at good risk/reward levels for a further correction higher.
The hourly chart technicals suggests further downside before the uptrend returns.
Indecisive price action has resulted in sideways congestion on the intraday chart.
Further upside is expected although we prefer to buy into dips close to the 1.2370 level.
We look to Buy at 1.2370 (stop at 1.2325)
Our profit targets will be 1.2480 and 1.2505
Resistance: 1.2625 / 1.2715 / 1.2845
Support: 1.2310 / 1.2125 / 1.1955
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GBPUSD confirmed bullish shiftAfter price broke higher tf supply, it retraced and tapped into a demand zone if formed beforehand. It took out liquidity it had left behind and then gave us a shift of inner structure, which could be a potential beginning of the expansion further to the upside. This then gave us a clean 1h POI to enter in on the ride to the upside.
GBPUSD | COULD THIS BE A GOOD SELL?Hey Everyone!
I believe this pair has the potential to go down for the following reasons:
- NFP came out positive for the US Dollar
- Strong resistance zone 1.26500
- Psychological level at 1.2600
- Resistance meets the 100 moving average on the weekly
I believe currently it would be wise to wait for that re-test of resistance before entering since the 1-4h & daily timeframes are in a fairly strong up-trend.
I don't think it will last long, however for favorable entry now is not the time to enter, wait for a push to the resistance and then look for a bearish candlestick confirmation to enter, this would give you a great risk-reward and could potentially drop down to re-test the up-wards channel bottom.
Good Luck!
GBPUSD Potential DownsidesHey Traders, in today's trading session we are monitoring GBPUSD for a selling opportunity around 1.25700 zone, GBPUSD was trading in an uptrend and successfully managed to break it out. Currently GBPUSD seems to be in a correction phase in which it is approaching the retrace area at 1.257000 resistance area.
Trade safe, Joe.
GBPUSD Potential DownsidesHey Traders, in today's trading session we are monitoring GBPUSD for a selling opportunity around 1.24450 zone, GBPUSD is trading in a downtrend and currently seems to be in a correction phase in which it is approaching the major trend at 1.24450 support and resistance zone.
Trade safe, Joe.
GBP USD - FUNDAMENTAL ANALYSISThe US dollar (USD) has staged a comeback against the Pound Sterling (GBP) and Euro (EUR) over the past few weeks, but foreign exchange analysts at MUFG still consider that medium-term depreciation is the most likely outcome.
The bank considers that the US Dollar exchange rates are overvalued, especially against the Japanese Yen (JPY) and net capital flows are likely to be less supportive.
It also considers that the Euro-Zone and Chinese outlooks are more favourable, especially given that gas prices have declined sharply.
MUFG also expects the Fed will cut rates before the ECB while the Bank of Japan will tighten policy.
Monetary policy will inevitably be a key aspect. Although the immediate debate is still surrounding the potential for further interest rate hikes, MUFG expects the debate will switch to the potential for a Federal Reserve policy reversal as the US economy deteriorates.
According to the bank; “ The Fed will be cutting rates prior to the ECB. Inflation in Europe is stickier due to energy and food prices and the Fed will have much more scope to respond once economic conditions in the US weaken further from here. ”
After an extended period of quantitative easing, MUFG also expects that the ECB quantitative tightening programme through bond sales will put upward pressure on longer-term yields and support the Euro.
Global Growth Trends Still Favourable
MUFG notes that previous forecasts of an extended UK recession have been revised away and the Euro-Zone has also been resilient.
As far as China is concerned it adds; “ Recent data has disappointed, in particular on the manufacturing side of the economy, but pent-up domestic demand likely has further to run which will act as a source of global growth this year. ”
Although market sentiment has been more cautious, it expects overall growth dynamics will not favour the US dollar as Asia rebounds.
A related issue is the key area of energy prices.
The jump in energy costs last year was a key reason why agencies such as the IMF and central banks were so negative surrounding the European economic outlook last year.
Gas prices have, however, declined sharply with a slump from over 90% from the peak and close to 2-year lows.
Gas storage levels are also at very high levels in historic terms ang MUFG expects storage levels will hit 100% in the summer.
In this context, lower gas prices will improve the growth outlook and strengthen the trade outlook.
The Bank of Japan has resisted tightening monetary policy, but MUFG notes that the economy is strengthening and inflation has increased.
According to MUFG; “ we maintain that YCC has passed its sell-by-date and while it remains unclear whether price stability at 2% can be achieved, the BoJ will still move to widen the band or scrap it completely. ”
The bank expects that the yen will strengthen sharply if the Bank of Japan lets yields increase which will drag the dollar lower.
Negative Long-Term US Debt Dynamics
The immediate focus is on the US debt ceiling and political brinkmanship ahead of early June when the US Treasury will run out of cash.
These short-term dynamics are mixed for the US dollar with concerns over the economy, but potential defensive support if risk appetite deteriorates.
MUFG focusses on the underlying debt dynamics and the potentially unsustainable situation.
MUFG notes that the budget deficit in the first seven months of fiscal 2022/23 amounted to $928bn from $360bn the previous year.
On a longer-term view, in considers the debt dynamics will be potentially negative for the US currency.
De-Dollarization Hype
Although MUFG considers that the de-dollarization rhetoric is rather more hype than substance, there is still the risk that long-term confidence in the dollar will decline with scope for some further increase in Euro and yuan central bank reserve holdings.
MUFG also notes that there has been strong central bank gold buying and it expects this trend will continue.
The bank also sees a risk that the US use of financial sanctions will discourage official players to hold reserves in the dollar due to fears over asset freezes.
MUFG notes that there has been an extended period of Wall Street out-performance, but expects this trend will reverse and net capital flows will be less supportive for the US currency.
It adds; “ We see a renewed drop in US equities as investors position more assertively for US recession. ”
Japan’s Nikkei 225 index has posted a 32-year high and the German DAX index has hit a record high.
It also sees scope for a sustained rebound in emerging-market equities after an extended period of under-performance.
It adds; “ A reversal of the current period of deep EM undervaluation poses downside risks for the USD in the medium-term. ”
Long-Term Peak, Dollar Overvalued
MUFG notes that the dollar last year reached the highest level for over 20 years.
It also notes that at the October peak the currency index was 2 standard deviations stronger than the average over the past 40 years.
It adds; “ Similar extreme levels of USD overvaluation were last recorded in the early 2000’s and mid-1980’s and subsequently proved to be long-term bearish turning points for the USD. ”
The bank also considers that the dollar is substantially overvalued, especially against the yen, increasing the likelihood of mean reversion.
GBP USD - FUNDAMENTAL ANALYSISIn a fresh look at the outlook for the Pound to Dollar (GBP/USD) exchange rate, Jane Foley, Senior FX Strategist at Rabobank, draws attention to a potential slide for the sterling.
"We see scope for cable to drop to 1.22 on a 3-month view," says Foley, Senior FX Strategist at Rabobank. This outlook indicates a drop in the value of the pound against the dollar by more than one per cent from its current position.
The basis of this outlook, according to Foley, appears to be linked to market positioning and the capability of both the pound and the euro to handle impending disappointing economic data. The narrative surrounding these factors suggests a period of increased volatility for the pound, especially against its major counterparts.
A surge in gilt yields and revived anxieties around UK's fiscal management have the potential to disrupt Pound Sterling (GBP)'s recent strength against the US dollar (USD), according to the analyst.
This is in light of market expectations of additional Bank of England (BoE) rate hikes, which have failed to solidify GBP/USD's initial gains against major currencies.
"Yesterday’s headlines that gilt yields had soared back towards the levels hit after the disastrous mini-budget last September was unsettling for investors and for the pound," says Foley.
Further, despite market expectations of BoE rate hikes, "the Pound failed to hold initial gains against either the USD or the EUR," Foley adds.
Q1 Performance and Market Positioning of the Sterling
In terms of the sterling's performance, the currency had a strong showing in the first quarter.
Data from this period suggested that the UK economy was outperforming expectations, earning the sterling the title of the best-performing G10 currency.
Despite these positive indicators, Foley posits that the UK's growth outlook remains far from robust.
"The Pound was the best performing G10 currency in Q1 as a stream of UK data suggested that the economy was performing better than expected," says Foley.
However, Foley points out that, "The UK growth outlook is still far from strong."
Market positioning towards the sterling has shown a shift in Q1.
Speculators have moved from short GBP positions to net long GBP positions.
However, recent data showing stronger-than-expected UK CPI inflation has reintroduced fears of a potential recession.
BoE Policy and the Potential of a UK Recession
Looking ahead, the BoE's policy decisions might bear heavily on the GBP/USD exchange rate.
The possibility of the BoE raising the Bank rate to 5.0% or even higher is under consideration.
This raises a serious question: would the BoE need to push the UK economy into recession to restore CPI inflation to its 2% target?
"The risk that the BoE will have to raise the Bank rate to 5.0% or maybe higher has clearly increased," says Foley.
She goes on to add, "The first is whether the Bank will have to push the UK economy into recession to restore CPI inflation to its 2% target."
Impact of Brexit on the Pound Sterling
The long-term implications of Brexit are also critical to understanding Pound Sterling's position.
The UK's high inflation rate, which is the highest in the G7, alongside other fundamental weaknesses, have caused some to question whether these issues stem from the aftermath of Brexit.
"The UK has the highest inflation rate in the G7, a soft growth outlook, a weak record on investment and productivity growth in recent years," Foley points out.
She continues, "Inevitably, this has raised questions about how much of this is related to Brexit."
Moreover, the sterling's decline to its pre-2016 Brexit referendum levels appears to have impacted price levels in recent years, with changes in post-Brexit trading arrangements possibly causing further economic turbulence.
"GBP has never returned to its pre-2016 Brexit referendum levels which likely had had an impact of the price level in recent years," says Foley.
UK’s Economic Sensitivities and Recession Risks
The UK's particular economic sensitivities may also be playing a role in the inflation scenario. For instance, the UK's high dependency on gas and small agricultural sector could increase its sensitivity to energy crises and food supply shortages.
"The UK has little gas storage and a high level of dependency on gas which would have raised its sensitivity to last year’s energy crisis. It also has a very small agricultural sector which has likely increased its sensitivity to supply shortages of food," Foley highlights.
These factors, coupled with the risk of higher interest rates, brings the possibility of recession back into focus. According to Foley, speculators who took long GBP positions recently may have acted hastily, considering these lingering threats.
"Either way the risk of higher interest rates means that recession risks are back in the sights, just as forecasters such as the IMF had indicated that the UK would avoid this scenario this year," Foley mentions.
Comparatively, Kit Juckes, Global Head of FX Strategy at Société Générale Juckes expects depreciation of Pound Sterling (GBP) given the UK's high current account deficit and the global interest rate environment.
On the other hand, Shaun Osborne, Chief FX Strategist at Scotiabank envisages Pound Sterling (GBP) potentially benefiting from higher yields in the short term, but warns of a probable depreciation due to the UK's fundamental weaknesses.
GBPUSD Potential DownsidesHey Traders, in today's trading session we are monitoring GBPUSD for a selling opportunity around 1.24 zone, GBPUSD is trading in a downtrend and currently seems to be in a correction phase in which it is approaching the major trend at 1.241 support and resistance zone.
Trade safe, Joe.
GBPUSD Potential DownsidesHey Traders, in today's trading session we are monitoring GBPUSD for a selling opportunity around 1.246 zone, GBPUSD is trading in a downtrend and currently seems to be in a correction phase in which it is approaching the major trend at 1.246 support and resistance zone.
Trade safe, Joe.
GBPUSD Below the 1D MA50, expecting more selling.The GBPUSD pair hit our upside target (1.2650) and May 27 2022 High on our last buy signal (see chart below) almost 2 months ago:
The price is now on the 1D MA50 (blue trend-line), having closed a candle below it yesterday for the first time since March 16. This is a bearish continuation signal that is targeting the 1D MA200 (orange trend-line) yet again. Our target is at 1.2100. The 1D RSI can provide additional insight on a potential new buy entry at the bottom.
If however the price closes above the 1D MA50 instead on two straight 1D candles at least, then hedge the position with a buy targeting the June 01 2021 Lower Highs again. If the pair closes a 1D candle above that level, it will be the first time to do so in years, and will be a major buy signal. In that case we will buy and target the 1W MA200 (red trend-line) at 1.2850.
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