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GBPUSD Forex Analysis
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On the daily chart the GBPUSD is still looking like it would test the double bottom support level from March/April 2021 but is hovering within the last weeks trading range and above the daily 200 ema.
A stochastic indicator (10,3,3) is showing daily levels around the oversold area but no real momentum either to the downside or upside. The 20 and 50 daily ema’s are twisted together so this infers that sustained momentum is becoming more bearish but generally rangebound.
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On a smaller time, frame like the hourly, using the 20,50 and 200 period exponential moving averages and a stochastic indicator may offer up some trading opportunities. The idea could be to take a short position when the 20 is below the 50 and 200 and the stochastic is overbought. A close of a candle below the 20 at the first time of asking maybe enough of a trigger for more sellers to step in and for shorts to test the nearest swing lows.
The ActivTrader sentiment indicator is showing that a slight move towards the traders on the platform becoming more bullish at the start of this week but still relatively even at 45% bearish v’s 55% bullish. An increase in positive sentiment may see these traders holding longs get squeezed out of their position and a close below the daily 200 ema may see them puke their position.
Market watchers had been anticipating a similar outcome to the Bank of England’s monetary policy meeting to that of the FOMC, where nothing really changed but a more Hawkish tone was delivered. Unfortunately for the market’s analysts, they may still have to wait until the end of August into September as the MPC like the Fed are waiting for ‘Clear evidence and significant progress’, though sustained inflation above 2% is still not likely and over 1.5 million workers are still currently on furlough. The COVID-19 Delta variant is causing disruptions to open the economy fully and a change in the UK governments Health Minister may have a positive impact for the UK economy if Sajid Javid can come up with a new twist to getting the coronavirus infections under control whilst allowing the healthy to go about their business with more freedom.
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With NFP on Friday the rest of the week should be relatively calm for the GBPUSD. The UK-EU trade dispute has quietened. This week’s economic calendar has UK final 1Q GDP on Wednesday, while June housing prices data and may mortgage approvals is not likely to move the needle on pound versus dollar. Keeping an eye on the US dollar index is probably the best way to decipher direction in the GBPUSD for now, as EURGBP is looking more range bound. Currently the DXY is trading with the last two weeks trading range, with the FOMC weeks candle being dominant and current prices looking still more likely to test higher. A close above the weekly 50 ema and we could be testing 2021 highs and above.
