GBPUSD daily threatens to move out of its weak area, between the lower blue and red bands, and into the neutral zone (blue arrow). The red bands have expanded with the currency pair's downside swing (green rectangles). We note that yesterday saw a long blue candle, with follow-through today. Given the increase in volatility from the broader downside move, this rally may provide an opportunity. To this end, we regard the GBPUSD hourly chart on the right. The BoE is expected to raise its official bank rate by 25bps to 50bps on Thursday; GBPUSD supportive. However, the RSI is near the overbought area (green rectangle on the righthand bottom chart). Moreover, the price has approached the R2 pivot resistance given this potential overbought condition. If this acts as a reaction level, the trend-following indicators and hourly stochastic (black ellipses) will need to turn down as a signal of weakness.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.