Technical Analsis
Technical Analysis GBPUSD
- The United States president supported the exit of the UK from the EU
- US President Donald Trump said the UK would benefit from Brexit. Will the British pound quotations increase?
On June 3-5 Donald Trump is in the UK on a state visit. He met with Prime Minister Theresa May, who will leave her post on June 7. The American president said that he would like to see as her follower on the post the representative of the conservative party Boris Johnson, a famous supporter of Brexit. Recall that the exit of the UK from the European Union was postponed and is now scheduled for October 31, 2019. Donald Trump advised Boris Johnson to arrange Brexit in the most rigid scenario, which implies a refusal to pay to the European budget. The American president also spoke about the possibility of expanding mutual trade between the US and the UK and signing a new trade agreement between the two countries after Brexit. Important macroeconomic data for April will be published in UK on June 10, which may affect the pound rate (GDP, industrial production and construction, trade balance and others).
On the daily time-frame GBP/USD: D1 adjusted up from a 5-month low. Various technical analysis indicators have generated an uptrend signals. Further growth of quotations is possible in case of publication of positive macroeconomic data and the signing of a trade agreement between the United States and the United Kingdom.
The Parabolic indicator shows an uptrend signal.
The Bolinger® bands widened, indicating high volatility.
The RSI indicator is below 50. It has formed a divergence to the increase.
The MACD indicator gives a bullish signal.
The bullish momentum may develop in case if GBP/USD exceeds its last higher fractal: 1,275. This level may serve as an entry point. The initial stop loss may be placed below the 5-month minimum, the Parabolic signal and the last lower fractal: 1.255. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. 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 (1,255) without reaching the order (1,275), 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 1,275
- Stop loss Below 1,255
Market Overview
- Markets rebound after Powell hints at possible cut
- Dollar weakening slows on below expected orders decline
US stock market rebounded on Tuesday buoyed by Fed chair Powell's comment central bank ‘ will act as appropriate to sustain the expansion’ . The S&P 500 rose 2.1% to 2803.27. Dow Jones industrial advanced 2.1% to 25332.18. The Nasdaq rallied 2.7% to 7527.12. The dollar weakening slowed as data showed US factory orders fell below expected 0.8% in April. The live dollar index data show the US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, slipped 0.1% to 97.113 and is lower currently. Futures on US stock indices point to higher openings today.
DAX 30 outperforms European indexes by large margin
European stocks recovery accelerated on Tuesday led by auto maker stocks lifted by brokerage upgrades. Both the EUR/USD and GBP/USD continued their ascent and are higher currently. The Stoxx Europe 600 ended 0.7% higher. The German DAX 30 jumped 1.5% to 11971.17. France’s CAC 40 gained 0.5%. UK’s FTSE 100 added 0.4% to 7214.29. after reopening.
Nikkei leads Asian indexes gains
Asian stock indices are mostly higher today despite mixed data. Nikkei jumped 1.5% to 20776.10 with yen little changed against the dollar. Chinese stocks are mixed after Caixin report activity in China's service sector slowed sharply in May: the Shanghai Composite Index is down 0.03% while Hong Kong’s Hang Seng index is 0.3% higher. Australia’s All Ordinaries Index extended gains 0.4% despite reports that Australia's Q1 growth slowed to weakest in a decade with Australian dollar slowing its climb against the greenback.
Brent gaining
Brent futures prices are edging higher today. The American Petroleum Institute late Tuesday report indicated US crude inventories rose by 3.6 million barrels last week. Prices rose yesterday: August Brent ended up 1.1% at $61.97 a barrel on Tuesday. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.