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Gbpusd-trading

GBP/USD – Hawkish Yellen could derail the recoveryWednesday’s inverted bullish hammer candle along with a bullish price RSI divergence on the 4-hour chart suggests a short-term bottom may be in place at Tuesday’s low of 1.2089. However, hawkish Yellen could push the pair back to 1.2089. In fact, the rate divergence could take the pair to falling channel support 1.19 levels… although such a move would happen over one week or so. On the higher side, technical recovery is seen gaining traction once the pair sees a daily close above 1.2325.
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GBP/USD – Dip demnd likely on bullish divergencePair’s sharp rally from yesterday’s low of 1.2089 to as high as 1.2325 in Asia suggests a temporary low is in place and the spot could rise further to falling trend line resistance seen currently around 1.2440, especially since we have a bullish price RSI divergence on the 4-hr chart. On the 4-hr chart, both the 5-MA and 10-MA are still sloping onwards, hence the spot could retreat to 1.22 -1.2180 levels before moving higher again.
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GBP/USD – “Fat finger’ fall is being retracedSterling crash was the result of a 'Fat Finger' move which coincided with FT story citing French President Hollande demanding 'Hard Brexit' so that precedent is set and other nations are not motivated to leave EU. However, Reuters suggests it was fat finger. We agree and also feel that Hollande is being unnecessarily blamed. This is because; talk of 'Hard Brexit' is in place for quite some time. Hence, Hollande's comments are not surprising and cannot or should not result in a kind of sell-off which we saw in Asia. Moreover, the fat finger sell-off is being retraced. The spot has recovered to 1.2465 levels from the low of 1.1491 (Reuters low). Better-than-expected UK manufacturing production number could help the bird extend the recovery ahead of US non-farm payrolls release. On the higher side, 1.2590-1.2630 is key resistance levels to watch out for, while on the downside round figures could offer support. On the hourly chart, 1.2423 and 1.2388 could act as a support as well.
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GBP/USD – Sellers could come-in above hourly 50-MA hurdleCable’s recovery from the intraday low of 1.2686 followed by a breach of the falling trend line on the hourly chart amid recovery in the intraday indicators from the oversold territory suggests the hourly 50-MA level of 1.2776 could be put to test and may be breached for a test of 1.28 handle. However, caution is advised anywhere above 1.2776 as the hourly 50-MA is still sloping downwards suggesting a re-test of 1.27-1.2686 is likely.
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GBP/USD: Upbeat UK services PMI may rescue the birdThe sell-off in the bird appears to have stalled around 1.2930 levels in line with the oversold intraday indicators. UK services PMI for September is likely to show the pace of expansion in the activity slowed somewhat, however, note that both manufacturing and construction PMI bettered estimates. Hence, the odds of a blow out services PMI number are high. Pound could revisit hourly 50-MA level located at 1.28 levels if the service PMI beats estimates. Furthermore, IMF has come up with a bearish call on Pound, saying the bird may drop on Brexit reality. The fund is known to lag markets big time and hence one is compelled to think the currency may have hit a short-term bottom. However, don’t get too optimistic as we have US ISM non-manufacturing report and ADP report due for release later in the day. It is worth mentioning that major support on the downside is seen directly around 1.2590.
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GBP/USD – Oversold on intraday timeframesThe pair has been offered in Europe and US after UK PM Theresa May said she will invoke article 50 by March 2017. She also said that it could be a hard Brexit – meaning the country would retain the right to determine immigration against access to free markets. Consequently, Sterling is suffering across the globe. However, the reaction looks slightly irrational as – • Eurozone would be equally hit if UK loses access to common markets. However, Euro is somehow resilient that too despite Deutsche Bank concerns. • Furthermore, PM setting the date for invoking article 50 has taken out uncertainty. Nevertheless, the currency pair is sliding and clocked a low of 1.2825 levels. Technicals – oversold on intraday time frames There is bullish divergence on 15- min charts, while the hourly RSI and 4-hr RSI are oversold. Hence, the spot could revisit area around 1.2980 levels, which is the falling trend line hurdle on the 15-min chart. On the lower side, 1.2789 (post Brexit low) is a major support.
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GBP/USD: UK manufacturing PMI preview, selling seen below 1.2920UK manufacturing PMI for the month of September is seen coming-in at 52.1 vs. August number of 53.3. The actual number is more likely to print around estimates as highlighted by CBI numbers released on September 22. Weaker Pound Boosts UK Manufacturing in September - CBI British manufacturing grew strongly in September and orders flowed in at an above-average rate. The Confederation for British Industry's total order book balance held at -5, well above its long-run average of -15. CBI chief economist Rain Newton-Smith said, “Our members tell us and our surveys show that the fall in sterling has boosted international competitiveness for many businesses, with export order books remaining well above average in September, despite weakening slightly”. Cable could test trend line hurdle on strong PMI - A better-than-expected UK PMI number could help Cable test supply around 1.2975 (falling trend line level of Sep 7 high and Sep 13 high). A weaker figure could add to the bearish tone around GBP. UK PM Theresa May said over the weekend that article 50 would be triggered by March 2017. European and US desks are likely to respond to this by offering British Pound. Technicals – Sell-off likely below 1.2920 Pair’s retreat from falling trend line hurdle on Thursday coupled with a failed attempt to take out trend line hurdle again on Friday followed by a gap down opening today suggests bears have regained control and the spot witness a quick fire selling to 1.2865 (Aug low) once the Asian session low of 1.2920 is breached. On the higher side, only a daily close above descending trend line would sudden short-term bearish invalidation.
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GBP/USD Forecast: Rejected at descending trend linePair’s retreat from the descending trend line hurdle of 1.3057 earlier today suggests the technical recovery from the low of 1.2916 may have run out of steam and given the short-term moving averages – 5-DMA and 10-DMA are still sloping downwards, the prices could revisit 1.2970 area before making another attempt at the descending trend line. Sellers are seen coming-in once the support at 1.2916 is breached. On the higher side, day end close above 1.3057 would open doors for 1.3120-1.3150 levels.
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GBP/USD – Descending trend line hurdle could be put to testPair’s rebound from sub-1.2950 area for the third straight day on Tuesday finally manages to secure a daily close above 1.30. This coupled with a minor retreat in Asian session today to 1.2991 followed by a recovery to 1.3015 suggests dips are likely to be bought into and the spot looks poised to test falling trend line resistance seen around 1.3075 levels. On the downside, only a daily close below 1.2915 (Sep 23 low) would signal short-term bearish invalidation, although shorts are likely to come-in below 1.2865 (Aug low).
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GBP/USD - Potential inverse head and shoulder on hourlyPair’s retreat from the NY session high of 1.3121 to 1.3040 if followed by a break below 1.30 would suggest the retreat from the Sep 6 high of 1.3445 has resumed and could yield a move to 1.29 levels. On the other hand, a rebound from near 1.3040 amid the bullish crossover between hourly 50-MA and hourly 100-MA would increase the odds of the pair moving towards inverse head and shoulder neckline of 1.3130, which is also a larger falling trend line resistance.
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GBP/USD – Bullish divergence worked, expecting a pullback nowBullish price RSI divergence seen on the hourly and 4-hour chart yesterday managed to push the GBP/USD pair well above 1.30. At the time of writing, the pair was trading around 1.3076. What’s next? Divergence on the intraday charts usually signal pull backs, while those on the daily/weekly chart signal reversal. We have not seen any divergence on the daily chart… hence; it is too early to say that a bottom has been made. Also note, on the hourly chart the 100-MA is sloping downwards and the RSI has hit the overbought territory. Thus, we could see a pullback hourly 100-MA 1.3037 before another attempt at daily highs is made.
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GBP/USD – Selling likely below Asian session lowDespite rebound from the low of 1.3138, the subsequent failure in Asia at the rising trend line resistance suggests a move below Asian session low of 1.3228 could yield a fresh drop to 50-DMA support of 1.3162. On a slightly larger scheme of things, bearish invalidation is seen only above 1.3347 (Sep 12 high). Macro data UK retail sales for the month of August are expected to have ticked higher. Strong figure could help Pound re-test 1.33, but reckon the resistance at 1.3347 would hold on account of caution ahead of BOE meeting later today.
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GBP/USD – Pair drops to 50-DMA as expected, what’s next?As noted in Friday’s update - GBP/USD – Bearish cloud cover & ‘J curve’ theory – the pair has dropped to 50-DMA. The pair clocked a low of 1.3138 and was trading around the 50-DMA level of 1.3154. What’s next? The spot appears on track to test 1.3059 (Aug 30 low) especially if the day end close is below 50-DMA level of 1.3154. Overall, the bearish mood is likely to persist, courtesy of - Dark could cover followed by two-day sell-off… followed by a big drop on Tuesday. Short-term bearish invalidation is seen only if the spot sees a day end close above 1.3279 (Aug 26 high).
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GBP/USD – Rising trend line breached ahead of UK dataUK employment data and wage growth figure for the month of August and July are due for release today. The spot has breached rising trend line ahead of the data release and so has the daily RSI. This makes the pair extremely vulnerable to weak set of data release. Moreover, a weak data would pour cold water over the optimism that UK economy is holding up well despite Brexit. Hence, the spot appears on track to revisit recent lows around 1.3060. In case, the data is upbeat we could see the spot revisit 1.33 handle, however, bearish invalidation is seen only if the pair sees a day end close above 1.3346.
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