Technical Analysis: It’s a Tough Week for Pound
The past week, 7 – 13 September, has been marked for the British pound with negative developments in Brexit trade deal talks. The British government made unilateral amendments to the deal signed last year by the EU and U.K., which, as it has admitted, ‘breaks international law in a very specific and limited way’.
GBP/USD
GBP/USD has dropped 483 points or 3.64%, breaking below 1.2800 at the week’s close. The pair looks headed toward 1.2690, where a daily support level lies.
The past week began for GBP/USD between 1.3300 and 1.3200, with a slight downward slippage from the previous week’s close. On Monday, the pair reached the daily support level at 1.3127 and lost some 179 points on Tuesday with a daily bear candle with no lower shadow. Then it took one day of consolidation around the 50-day SMA, and the quote fell more on Thursday and Friday, finishing the week at 1.2794.
The trend channel’s lower line in couple with the support level at 1.2690 is likely to provide some support for the pair during this week. However, the present downward momentum in the market makes buying orders too risky for now. The more reasonable tactic would be to monitor the price dynamics at the start of the week to see the market’s reaction to the nearing trend channel’s lower line and the daily support level at 1.2690.
If the selling momentum dies down there, a buying order at around 1.2790 can be a good mid-term deal.
GBP/EUR
GBP/EUR has slipped last week to 1.0799, which is 411 points or 3.67% lost. The fall has stopped exactly at the weekly support level at 1.0795. The euro’s relative strength in the present-day global economy is adding to the fundamental weaknesses of the pound in the pair’s sharp fall.
The GBP/EUR pair has been in the red the whole week with five bear candles. Whether the weekly support level is going to moderate the downward momentum remains to be seen, though it has already slackened the fall. Quite a lot will depend on Brexit trade deal talks in this respect. If the fall continues, which is a highly probable option, the pair could reach its year’s low registered in March in the middle of the new coronavirus crisis.
The interception of the 50-period SMA by the 20-period SMA on the daily timeframe looks almost inevitable now, which will be another confirmation for the downtrend reversal. However, these two moving averages could likewise indicate an uptrend reversal if the price consolidates at around 1.0800. Therefore, those looking for a potential mid-term buying order of the current lows may well benefit from such an indication.
If we take a glance at the 4-hour timeframe chart, we will see that a potential consolidation zone is forming already. However, more confirmation will be required to act upon a probable uptrend reversal.
Looking at the 4-hour chart from the candlestick-pattern perspective, we may be seeing a forming Adam and Eve uptrend reversal pattern, with the sharp fall already finished and a second milder one with the u-shape bottom to follow after a moderate rebound of the weekly support level. If that happens, it will be a strong indication of a possible uptrend reversal.
GBP/USD
GBP/USD has dropped 483 points or 3.64%, breaking below 1.2800 at the week’s close. The pair looks headed toward 1.2690, where a daily support level lies.
The past week began for GBP/USD between 1.3300 and 1.3200, with a slight downward slippage from the previous week’s close. On Monday, the pair reached the daily support level at 1.3127 and lost some 179 points on Tuesday with a daily bear candle with no lower shadow. Then it took one day of consolidation around the 50-day SMA, and the quote fell more on Thursday and Friday, finishing the week at 1.2794.
The trend channel’s lower line in couple with the support level at 1.2690 is likely to provide some support for the pair during this week. However, the present downward momentum in the market makes buying orders too risky for now. The more reasonable tactic would be to monitor the price dynamics at the start of the week to see the market’s reaction to the nearing trend channel’s lower line and the daily support level at 1.2690.
If the selling momentum dies down there, a buying order at around 1.2790 can be a good mid-term deal.
GBP/EUR
GBP/EUR has slipped last week to 1.0799, which is 411 points or 3.67% lost. The fall has stopped exactly at the weekly support level at 1.0795. The euro’s relative strength in the present-day global economy is adding to the fundamental weaknesses of the pound in the pair’s sharp fall.
The GBP/EUR pair has been in the red the whole week with five bear candles. Whether the weekly support level is going to moderate the downward momentum remains to be seen, though it has already slackened the fall. Quite a lot will depend on Brexit trade deal talks in this respect. If the fall continues, which is a highly probable option, the pair could reach its year’s low registered in March in the middle of the new coronavirus crisis.
The interception of the 50-period SMA by the 20-period SMA on the daily timeframe looks almost inevitable now, which will be another confirmation for the downtrend reversal. However, these two moving averages could likewise indicate an uptrend reversal if the price consolidates at around 1.0800. Therefore, those looking for a potential mid-term buying order of the current lows may well benefit from such an indication.
If we take a glance at the 4-hour timeframe chart, we will see that a potential consolidation zone is forming already. However, more confirmation will be required to act upon a probable uptrend reversal.
Looking at the 4-hour chart from the candlestick-pattern perspective, we may be seeing a forming Adam and Eve uptrend reversal pattern, with the sharp fall already finished and a second milder one with the u-shape bottom to follow after a moderate rebound of the weekly support level. If that happens, it will be a strong indication of a possible uptrend reversal.