GBPUSD has fallen to its lowest since the beginning of the month after scaling a high not seen since early October. In my earlier report, I highlighted heightened downside risks, which materialised through Brexit pessimism. More recently, however, after hitting lows in Asia trading, cable has popped a little higher to test the 38.2% fib level of the October selloff. It has also rejected resistance at 1.2921.
Daily trending and momentum setups all remain bearish. The short-term 21-Day EMA is biased down and resides at 1.2974. In addition, the flat Ichimoku cloud base sits at 1.2976 and therefore reinforces a strong resistance zone. Price is currently testing 1.29, the 61.8% fib of the post Brexit rally and a break through could see the cloud base tested. 14-Day RSI is below 50, though, for now, is pointing higher.
EMA’s on the 4Hr have continued their trend lower. The 50/21 EMA’s have given a dead cross signal, suggesting further downside risks. The averages are presently priced at 1.2975 and 1.2951 respectively. Moreover, an RSI failure swing has seen the momentum indicator rise out of an oversold condition, but remains bearish.
For GBPUSD, price moves are very fundamentally driven. Brexit headlines continue to dominate the pair, and given recent ‘no-deal’ headlines, downside risks have heightened. Therefore, the short-term bias remains bearish and a break below early morning lows (1.2823) could see the 1.2780 support. A deeper selloff to 1.27 could also be on the cards.
Volatility remains elevated for Sterling
- Average Earnings, Unemployment, CPI & Retail Sales are the key event risks this week.
Weekly Pivot Points
The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Akif began his trading career from the London Academy of Trading after completing an accredited Level 5 Diploma in Professional Applied Financial Market Trading. He then went on to manage a fund at a proprietary trading firm within the City trading multiple asset classes over multiple timeframes and has recently begun writing daily reports on G10 FX, Equity markets and Commodities at the firm. Akif joined the Society of Technical Analysts in February 2018 to gain the MSTA (and CFTe) designation. He focuses on European Indices, FX and Commodities.
TA qualifications: Diploma in Professional Applied Financial Market Trading