GBPUSD Bears and Bulls Wrestling For Control in Forex Market

The GBPUSD showed a strong reversal candle last week Friday. The bears were totally in control that day due to the massive wick on top of the candle and the candle close very near the low. Despite the reversal signal, price has not been able to break the low nor the high of that Friday daily candle: price has made four inside candles in a row (purple box in screenshot). What is next for the Cable: will the intermediate uptrend trump the longer-term downtrend or will it be the opposite?

We saw some great comments and analysis on Nathan’s NZDUSD contest question. Although no prizes are dealt out for this one, I am hoping to see the same participation: will the GBPUSD hit the top (blue) or the bottom (red) first? Please post your comments down below!

MY VIEW GU WEEKLY

The weekly chart shows a strong uptrend which is followed by a very impulsive fall (green arrow and red arrow on chart). A pinbar near the 50 Fibonacci level (blue arrow) could spell trouble for the bears but last week’s candle had a big wick on top of the candle (purple arrow). Conclusion: both sides seem to be struggling for control on the weekly chart.

MY VIEW GU DAILY

The daily chart is showing a different picture. The downtrend is visible and evident with clear lower lows and lower highs (red circles). The retracement rally however has posted a higher low (blue circle) in the mean time, which is indicating a wedge (red and blue lines). A wedge is always a sign of indecision.

MY CHOICE: BREAK TO THE DOWNSIDE

There are, however, a few factors that make me favor the downside break of the wedge.

1. There was strong bearish moment and downtrend prior to the wedge. There is a (slightly) higher chance that this bearish momentum will push price back into another bearish fall.


2. The very last part of the bearish trend (prior to the wedge) was the strong and steepest price action of the entire downtrend. This too increases the odds of the downtrend prevailing.

MY CONFIRMATION

I am placing importance on the bearish candle of the Wednesday’s daily candle. In my opinion that candle shows a decent chance of downtrend continuation but more confirmation is needed. In this case confirmation would be the trigger, which is the break of the support trend lines and bottoms. Hence when price is able to push through the support levels of the 4 hour chart (various blue lines), I think short trades look good. The main horizontal support level I am monitoring is the first bottom (dark blue circle) after the bearish impulse on the 4 hour chart (red arrow). Long trades do not look appealing to me unless price breaks above last week’s high (red circle here below). Please see this chart for an easier reference:

We saw great comments and analysis on the NZDUSD so we are hoping for the same performance from you this time around. Please drop in your great analysis down below! Thanks and wish you Happy Trading.

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GBP/USD – After Scottish Vote, Pound Jumps, Then Retracts

The pound is treating traders to strong volatility on Friday. GBP/USD pushed above the 1.65 level in the Asian session but has since fallen below the 1.64 line. The currency received a boost after the results of the Scottish referendum were released, which showed a decisive victory for the NO camp, which favored remaining in the United Kingdom. It’s a quiet day on the release front, with no UK events. The sole US release is the CB Leading Index, a minor event.

Scottish citizens went the polls on Thursday in a historic referendum on whether to secede from the United Kingdom. The markets had expected a very close vote, based on polls leading up to the vote. However, at the end of the day, the No side won the vote in convincing fashion, with 55% of the vote, versus 44% for the Yes side. There had been predictions of a financial downturn in the UK if Scotland had voted for independence or if the vote was extremely close. As well, a vote for to secede would have raised thorny economic issues such as what currency would be used by an independent Scotland. So, the wee hours of Friday morning brought a tremendous sense of relief in British political and financial circles after the final votes were counted, as the United Kingdom will indeed remain united.

Overshadowed by the focus on the Scottish referendum, British data was a mix on Thursday. British Retail Sales, the primary gauge of consumer spending in the UK, improved last month, posting a gain of 0.4%. However, CBI Industrial Order Expectations came in at -4 points, the worst showing since last September. The markets had expected a gain of 9 points.

Over in the US, Unemployment Claims had looked sluggish in September, but that changed on Thursday, as the key indicator sparkled, dropping to 280 thousand, down sharply from 315 thousand in the previous reading. The estimate stood at 312 thousand. Building Permits was not as strong, dipping to 1.00M. This was shy of the estimate of 1.04M. There was disappointing news from the manufacturing front, as the Philly Fed Manufacturing Index slipped to 22.5 points, down from 28.0 a month earlier. The estimate stood at 22.8 points.

The Federal Reserve released a highly-anticipated policy statement on Wednesday. The statement reaffirmed that interest rates would remain ultra-low for a “considerable time” after the asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $ 10 billion/month, and the remaining $ 15 billion/month is scheduled to be phased out in October.

GBP/USD for Friday, September 19, 2014

GBP/USD September 19 at 11:05 GMT

GBP/USD 1.6381 H: 1.6524 L: 1.6353

GBP/USD Technical

S3	S2	S1	R1	R2	R3
1.6000	1.6141	1.6263	1.6382	1.6484	1.6606

• The pound posted gains late in the Asian session, breaking above support at 1.6484. The pair dropped sharply in the the European session and is back below the 1.64 line.


• 1.6263 is providing strong support.


• On the upside, 1.6382 is fluid. This line was breached earlier and could see further action during the day. 1.6484 is stronger.


• Current range: 1.6263 to 1.6382.

Further levels in both directions:

• Below: 1.6263, 1.6141, 1.6000 and 1.5864


• Above: 1.6382, 1.6484, 1.6605 and 1.6755

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Friday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the pound has posted slight losses. The ratio currently has a majority of long positions, indicative of trader bias towards the pound reversing direction and moving to higher ground.

GBP/USD Fundamentals

14:00 US CB Leading Index. Estimate 0.4%.

* Key releases are highlighted in bold

*All release times are GMT

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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GBP/USD – Pound Slips on Scottish Worries

The British pound continues to point southwards on Monday. In the European session, GBP/USD is trading in the mid-1.61 range, its lowest level since November. The pound is under strong pressure as polls show that support for backers of Scottish independence is increasing. In the UK, Halifax HPI posted a weak gain of 0.1% last month. In the US, it’s a quiet start to the week, with no major releases on Monday.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.

The pound’s latest troubles are blowing north of London, as Scots prepare to vote in a referendum on independence later this month. Polls taken on the weekend show that supporters of independence are gaining ground and hold a slight majority. If voters do choose to leave the UK, this would create a lot of questions and uncertainty, including what currency an independent Scotland would use. As voting day looms closer, we are likely to see more pressure on the pound.

There were no surprises from the BoE late last week, which held steady with its monetary policy. The central bank maintained interest rate levels at 0.50%, where rates have been pegged since February 2009. With two MPC members voting in favor of raising rates last month, the markets will be keenly interested in seeing the breakdown of Thursday’s vote, which will be released in two weeks time. If the minutes show that additional MPC members are in favor of a rate hike, BoE Governor Mark Carney will be under pressure to raise rates, which would bolster the pound. The central bank also kept QE steady at 375 billion pounds.

GBP/USD for Monday, September 8, 2014

GBP/USD September 8 at 15:45 GMT

GBP/USD 1.6142 H: 1.6233 L: 1.6103

GBP/USD Technical

S3	S2	S1	R1	R2	R3
1.5864	1.6000	1.6141	1.6263	1.6382	1.6484

• The pound continues to lose ground and is testing support at 1.6141. The round number of 1.6000 follows.


• 1.6263 has reverted to a resistance role as the pound has lost ground.


• Current range: 1.6141 to 1.6263.

Further levels in both directions:

• Below: 1.6141, 1.6000 and 1.5864


• Above: 1.6263, 1.6382, 1.6484 and 1.6565

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the pound has lost more ground. The ratio has a large majority of long positions, indicative of trader bias towards the pound reversing directions and moving higher.

GBP/USD Fundamentals

• 6:57 v. Estimate 0.1%. Actual 0.2%.


• 12:45 US Treasury Secretary Jack Lew Speaks.


• 19:00 US Consumer Credit. Estimate 17.4B.


• 23:01 British BRC Retail Sales Monitor.

* Key releases are highlighted in bold

*All release times are GMT

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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GBP/USD intraday technical levels and trading recommendations for September 5, 2014

One month ago, bears initiated a bearish trend off the price levels around 1.7150-1.7190. Since then, the GBP/USD pair has been declining within the depicted bearish channel.

The price levels of 1.7050 – 1.7000 failed to provide enough support for the pair. Hence, bears had an initial bearish target around 1.6800.

However, this price zone of 1.6800 – 1.6820 failed to provide support too. Thus, maintaining the downside movement within the depicted chart.

The current bearish destination is located around 1.6300-1.6250 which has been hit earlier today ( previous prominent daily bottom ).

In case bulls maintain the current daily closure in the form of a “bullish hammer daily candlestick”, a bullish corrective movement towards 1.6540 will be very probable.

Otherwise, sustained bearish pressure will expose the price levels around 1.6250 for retesting. It’s the nearest daily support to meet the pair

The material has been provided by InstaForex Company – www.instaforex.com

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