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Technical Analysis GBPUSD : 2019-07-22

Technical Analysis GBPUSD : 2019-07-22

Getting ready for parliamentary elections in the UK

July 22, 2019 in the UK, members of the ruling Conservative Party will vote.Will the British pound quotations grow up?

According to the results of the voting, not only the head of the British Conservative Party will be elected, but also the head of parliament and the successor of Theresa May as prime minister of Great Britain. The main contender for this post is Boris Johnson. US President Donald Trump has stated that he supports his candidacy and will work with him. Trump also thanked Johnson for his efforts in quickly organizing Brexit. Recalling that the exit of the UK from the EU should be held October 31, 2019. US support may help strengthen the British currency. Another positive factor for the pound was an unexpected increase in retail sales in the UK in June by 1% compared with May, which is noticeably more than preliminary forecasts. Now economists can reconsider the possible growth of GDP in the 2nd and 3rd quarters upwards.

GBPUSD Chart

On the daily timeframe GBPUSD: D1 adjusted up from a 15-month low. Various technical analysis indicators have generated uptrend signals. Further growth of quotations is possible in case of publication of positive macroeconomic data and positive Brexit.

  • The Parabolic indicator indicates downtrend signal. It can be used as an additional resistance level that must be overcome before opening a buy position.
  • The Bolinger bands narrowed, indicating a volatility decrease. Both lines slope upwards.
  • The RSI indicator is below 50. It has formed a pergence to increase.
  • The MACD indicator shows a signal to increase.

The bullish momentum may develop if GBPUSD will exceed its last upper fractal and Parabolic signal: 1,258. This level can be used as an entry point. The initial stop loss may be placed below the 15-month low and the last lower fractal: 1.238. After the opening of a pending order, stop shall be moved following the signals of Bollinger and Parabolic to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (1,238) without reaching the order (1,258), we recommend to cancel the order: the market sustains internal changes that were not taken into account.

Technical Analysis Summary

Position Buy Buy stop Above 1,258 Stop loss Below 1,238

Market Overview

Stocks pull back on rate cut bets’ moderation

Dollar strengthens on improving consumer sentiment

US stock market advance paused on Friday as steep interest rate cut expectations moderated after New York Fed said Williams’ comments about need to ‘act quickly’ referred to his academic research and not upcoming Federal Reserve meeting. The S&P 500 slid 0.6% to 2976.61, losing 1.2% for the week. Dow Jones industrial slipped 0.3% to 27154.20. The Nasdaq fell 0.7% to 8146.49. The dollar weakening reversed as University of Michigan consumer sentiment index was revised upward. The live dollar index data show the ICE (NYSE:ICE) US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.43% to 96.13 and is higher currently. Stock index futures point to higher market openings today

SP500 Chart

DAX 30 leads European indexes rebound

European stocks ended marginally higher on Friday despite renewed concerns Italy’s year-old coalition government might collapse. Both EUR/USD and GBP/USD turned lower but are higher currently. The DAX 30 rose 0.3% to 12260.07. France’s CAC 40 inched up 0.03% and UK’s FTSE 100 added 0.2% to 7508.70.

Chinese shares lead Asian indexes retreat

Asian stock indices are mostly falling today while the STAR market in China, a Nasdaq-style board of 25 tech companies, gains after opening due to oversubscription in IPO shares by retail investors. Nikkei fell 0.2% to 21416.79 with yen slide against the dollar intact. China’s markets are retreating: the Shanghai Composite Index is down 1.3% and Hong Kong’s Hang Seng Index is 1.3% lower. Australia’s All Ordinaries Index pulled back 0.1% with the Australian dollar slide against the greenback intact.

Brent up on Middle East tensions

Brent futures prices are extending gains today. Prices rose on Friday on report Iran seized a U.K.-flagged tanker Stena Impero: Brent for September settlement ended 0.9% higher at $62.47 a barrel Friday, nevertheless closing 6.4% lower for the week.

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