Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

British Pound GBP/USD - Double Top or Further Rally?

Currencies / British Pound Apr 11, 2014 - 10:04 AM GMT

By: Nadia_Simmons

Currencies

Earlier today, the greenback moved higher against the British pound after better-than-expected jobless claims data, which showed that the number of people filing for initial jobless benefits in the week ending April 4 declined to an almost seven year low. Will this drop in British currency trigger a bigger correction? What is the technical picture of cable? We invite you to read our today's Forex Trading Alert.


In our opinion, the following forex trading positions are justified - summary:

  • EUR/USD: none
  • GBP/USD: short (stop-loss order: 1.6855)
  • USD/JPY: none
  • USD/CAD: none
  • USD/CHF: none
  • AUD/USD: none

EUR/USD

Looking at weekly chart, we see that EUR/USD bouced off the lower border of the rising trend channel (marked with brown) and came back above the long-term declining resistance line - at least for now. As a reminder, invalidation of the breakdown is a strong bullish signal that suggests further improvement. Despite these positive circumstances, the common currency remains below the 2014 high and the rising resistance line (marked with red), which succesfully stopped growth in the previous month.

However, if we take a look at the Euro Index - which is based on slightly different prices, we get a very different picture. We have discussed this chart in today's Gold & Silver Trading Alert:

The situation is clearer today, as the 2013 highs have been surpassed. Now it seems likely that the rally will be stopped by the declining long-term resistance line, just like it was the case about a month ago.

We will be looking for confirmations along the way, but at this time our best guess is that the Euro Index will rally to the 139 level or close to it (a move to the March high is not out of the question) (...).

What does the above mean? That the breakout from the first chart is not confirmed and the breakout above the long-term resistance line is not really significant just yet. Moreover, even if we focus on the first chart alone, we have to note that the previous "breakout" was seen in March and it was followed by its quick invalidation and visible declins. We could very well be seeing a similar pattern shortly.

Are there any important short-term resistance levels which could stop buyers before reaching the annual high? Let's take a look at the daily chart.

In our last Forex Trading Alert, we wrote the following:

(...) taking into account the current position of the indicators (buy signals remain in place), it seems that we may see further improvement in the coming day (or days). If this is the case, the next upside target for the buyers will be the upper line of the declining trend channel (currently around 1.3843).

As you see on the above chart, the buyers not only pushed EUR/USD above the this resistance line, but also above the resistance level based on the March 24 high and the 70.7% Fibonacci retracement. From this perspective, we see that the exchange rate reached the resistance zone created by the 76.4% and 78.6% Fibonacci retracements (around 1.3896-1.3900). If it is broken, we may see further improvement and an increase to the previously-broken green resistance line, which currently almost intersects the 2014 high. However, if this resistance area encourages sellers to act, we may see a pullback in the coming days and the first downside target will be the upper line of the declining trend channel (which serves as support at the moment).

Since there were only daily rallies in the past 4 days, it seems that a correction here is more likely. This correction can - and likely will - translate into a reversal on the long-term chart and quite possibly lead to greater declines.

Very short-term outlook: mixed Short-term outlook: bearish MT outlook: bearish LT outlook: bearish

Trading position: In our opinion no positions are justified from the risk/reward perspective. We are not opening short positions just yet, because of the divergence on the long-term charts, however we will quite likely open it once we see some kind of confirmation.

GBP/USD

On the daily chart, we see that the situation has improved significantly as GBP/USD broke above the resistance zone created by the 76.4% and 78.6% Fibonacci retracements (based on the recent entire decline). This positive event triggered further improvement and the exchange rate reached the 2014 high earlier today. If this strong resistance level holds, we will likely see a bearish double top pattern. In this case, the initial downside target will be the medium-term rising green line (currently around 1.6676). If it is broken, we may see a drop to the lower border of the orange rising trend channel (around 1.6550), which corresponds to the April low. Nevertheless, if the buyers do not give up and push the pair above the 2014 high, we may see an increase to the upper line of the trend channel (around 1.6962) or even to the 2009 high (around 1.7040). Please note that the current position of the indicators suggests that correction is just around the corner (the RSI declined from the level of 70, while the CCI and Stochastic Oscillator are overbought).

Very short-term outlook: mixed Short-term outlook: bearish MT outlook: bearish LT outlook: mixed

Trading position (short-term): In our opinion short positions (full) are justified from the risk/reward perspective at the moment with stop-loss order at 1.6855. Please note that if GBP/USD breaks above the 2014 high (and stop-loss order works), we'll consider opening short positions around the 2009 high.

USD/JPY

On the daily chart, we see that USD/JPY extended losses and (very temporarily - at least at the moment when these word are written) broke below the lower green support line. Therefore, what we wrote in our previous Forex Trading Alert is still up-to-date.

(...) if this support is broken, we will likely see a drop to the March 14 low or even to the February low. Please note that sell signals remain in place, supporting sellers.

Very short-term outlook: bearish Short-term outlook: mixed with bearish bias MT outlook: bullish LT outlook: bearish

Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment.

USD/CAD

Quoting our last Forex Trading Alert:

(...) the exchange rate reached its first downside target - the Feb.19 low (1.0909). (...) if it is broken, the next target for the sellers will be the horizontal red support line created by the May 2010 high (around 1,0850).

As you see on the above chart, the sellers realized their bearish scenario as USD/CAD declined to the red support line yesterday. If this strong support holds and encourages buyers to act, we may see a corrective upswing to the previously-broken green support line (around 1.1009). Please note that this scenario is reinforced by the current position of the indicators (the RSI bounced off the level of 30, while the CCI and Stochastic Oscillator are close to generating buy signals).

Very short-term outlook: mixed with bullish bias Short-term outlook: mixed MT outlook: bullish LT outlook: bearish

Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment.

USD/CHF

On Tuesday, we wrote the following:

(...) USD/CHF also extended declines and reached the first downside target - the 50% Fibonacci retracement (based on the recent increase). (...) if it is broken, we will likely see a drop to the next Fibonacci retracement (around 0.8794) or even to the lower line of the blue rising trend channel (currently around 0.8781). Please note that the current position of the indicators still favors sellers.

From today's point of view, we see that the sellers not only realized this scenario, but also pushed the exchange rate below the lower border of the blue rising trend channel, which is a bearish signal that suggests further deterioration. In this case, the nearest support is the declining brown line (which is also the upper line of the declining trend channel). Taking into account the current position of the indicators (the RSI approached the level of 30, while the CCI and Stochastic Oscillator are oversold), it seems that this line may pause declines in the near future). However, if it is broken, we will see a test of the strength of the March low.

Very short-term outlook: bearish Short-term outlook: bearish MT outlook: bearish LT outlook: bearish

Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment.

AUD/USD

Quoting our last Forex Trading Alert:

(...) we may see an increase to the next upside target (after a breakout above the upper line of the rising trend channel) around 0.9407. However, we should keep in mind that the RSI and CCI are overbought, which may trigger a pullback in the coming day (or days).

As you see on the daily chart, the buyers not only realized this scenario, but also pushed AUD/USD to the resistance zone created by the 70.7% Fibonacci retracement (based on the entire Oct.-Jan. decline). Taking this fact into account, we should consider two scenarios. On one hand, if this resistance area holds, we may see a pullback in the coming days. In this case, the downside target for the sellers will be the previously-broken upper line of the trend channel. However, if the resistance zone is broken, we will likely see an increase to around 0.9510, where the price target for the reverse head and shoulders pattern is (we wrote about this formation in our Forex Trading Alert posted on March 26). Looking at the current position of the indicators, we see that they are overbought, which suggests that correction is just around the corner.

Very short-term outlook: bullish Short-term outlook: bullish MT outlook: bearish LT outlook: bearish

Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment.

Thank you.

Nadia Simmons

Sunshine Profits‘ Contributing Author

Oil Investment Updates
Oil Trading Alerts

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules