Hello dear traders. Today we are going to analyze the sterling against the greenback forex couple. As we can see at the daily chart the currency pair is down trending and has found supported at earlier trading session at 1.6065 which is a new 9-month low. Prices rebounded in the previous to resistance at 1.6277 amid oversold indicators and investors were covering short positions. Downside bias has revived in the yesterday trading ahead of the Scotland vote for independency. Falling trend line suggests that bearish potential remains strong coupled by the 10, 20 and 50 Simple Moving Averages being well above prices. However, the currency pair fell sharply and substantially which concern us for its sustainability. The question here is, will this well extended bearish wave continue or a bounce up? One answer that all investors expect is that in case Scottish vote Yes the British pound would weaken further if the outcome is No then sterling would recover.
At the below chart we can see the daily volumes of futures and options traded on the Chicago Mercantile Exchange. We can see that on the last trading sessions the volume for the British pound was gradually decreasing as the prices were rising. That is actually indicating that bulls were losing their power as prices were retracing and eventually bears returned stronger. Also, as we approach the referendum day on Thursday, investors prefer to hold a wait and see stance. More polls would be published on Wednesday as well so we expect volume to increase from Wednesday. Lastly, we see on the price char that a “hanging man” candle formation was created below cap at 1.6277 before downside revival turning focus to support at 1.6065.
Looking at the oscillators, the Stochastic rose to overbought zone quickly, the OsMA has almost reset to zero line suggesting that the risk is turning to lower levels. However, the RSI (14) remains at 30 line suggesting that the currency pair is overextended to the short side in the longer term. In our opinion, the GBPUSD has obviously touched at extreme low at 1.6065 and bounced up providing a chance to reposition on the short side, it is likely that would revisits support at 1.6065. Nevertheless we have to be cautious due to Scottish vote that could trigger any directions, it is hard to make a call at the moment, therefore we would take intraday positions only with tight stop loss.
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16 сентября 2014 г. @ 10:15