Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Why Is the Weakness In GBP/USD Likely?

Currencies / British Pound Oct 21, 2018 - 08:02 PM GMT

By: Nadia_Simmons

Currencies

In recent days, the British pound declined quite sharply against the greenback, which caused several negative developments. Will currency bears be strong enough to trigger further deterioration in the coming week?

EUR/USD – Double Bottom or Further Declines?


On Wednesday, EUR/USD closed the day well below the red line (the upper border of the red declining trend channel). Yesterday, we noticed a small rebound, which looked like a nothing more than a verification of the earlier breakdown.

Additionally, the sell signals generated by the indicators were in play, supporting another move to the downside. Therefore, we wrote in our yesterday’s alert that “(…) if the pair declines from this area, we’ll see a test of the lower border of the consolidation or even the last week’s low in the following days.”

Looking at the daily chart, we see that currency bears took EUR/USD lower (as we had expected), which resulted in a daily closure under the lower line of the consolidation. Earlier today, the pair moved even lower and re-tested the last week’s low and the green support zone, making our short position more profitable (as a reminder, we opened it when EUR/USD was trading at around 1.1558).

Despite this deterioration, the combination of supports encouraged currency bulls to act, which caused a small rebound and a comeback to the lower line of the consolidation. Such price action looks like a verification of the earlier breakdown, which in combination with the sell signals generated by the daily indicators suggests that another attempt to move lower is just around the corner.

Therefore, if the exchange rate extends losses from current levels, we’ll see a drop to (at least) 1.1372, where the size of the downward move will correspond to the height of the green rising wedge.

GBP/USD – Breakdown and Its Consequences

 The first thing that catches the eye on the weekly chart is another invalidation of the earlier small breakout above the orange line. As you see, currency bulls have quite big problems with this resistance for many weeks, which increases its importance for the future of this currency pair.

In other words, we believe that as long as there is no successful breakout above it lower values of GBP/USD are more likely than another upswing. This scenario is also reinforced by the sell signal generated by the Stochastic Oscillator and the short-term picture of the exchange rate.

Why? Let’s take a look at the daily chart below.

From this perspective, we see that GBP/USD declined quite sharply in recent days (making our short positions profitable), which resulted in a drop a daily closure under the lower border of the grey rising trend channel.

Earlier today, we noticed a small rebound, but just like in the case of EUR/USD it looks like a verification of yesterday’s breakdown and suggests further deterioration in the following days – especially when we factor in the sell signals generated by the indicators and the above-mentioned medium-term picture of the exchange rate.

How low could GBP/USD go at the beginning of the coming week?

In our opinion, currency bulls will test the orange support line based on the early-September and early-October lows. Why this line? Because, when we take a closer look at the chart, we can see a potential head and shoulders formation and read the last downswings as shaping the right arm of the pattern.

If this is the case, and the sellers manage to push the pair under this line, the way to lower values of GBP/USD will be open and we’ll see (at least) a test of the early-October lows during the following sessions.

USD/CHF vs. Important Resistances

From today’s point of view, we see that although USD/CHF bounced off the recent lows once again and hit a fresh October peak, the exchange rate is still trading inside the orange resistance zone.

As you see it was strong enough to stop buyers not only earlier this month, but also many times in August, which suggests that as long as there is no successful breakout above it higher values of USD/CHF are not likely to be seen.

Nevertheless, when we take into account the fact that the buy signal re-generated by the Stochastic Oscillator remains in the cards, it seems that currency bulls will try to push the pair higher in the very near future. At this point, however, it is worth keeping in mind that slightly above the orange area the buyers will have to face another strong resistance zone (marked with yellow), which keeps gains in check since mid-July.

Therefore, in our opinion, another significant move to the upside will be more likely and reliable id we see USD/CHF above the yellow resistance zone. Until this time, another reversal from this area should not surprise us – especially if the daily indicators generate sell signals in the coming week.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Oil Trading Alerts as well as Gold & Silver Trading Alerts. Sign up now.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski
Founder, Editor-in-chief

Sunshine Profits: Gold & Silver, Forex, Bitcoin, Crude Oil & Stocks
Stay updated: sign up for our free mailing list today

* * * * *

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