Momentum Scorecard: Sterling to Continue Tumble vs EUR, USD
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TREND IN FOCUS: GBPUSD (H4)
- The GBPUSD remains in a moderate bearish trend the past three days, with its momentum score at -2.14 for the second consecutive day.
- As noted yesterday, the catalyst for recent selling pressure was a significant miss on the final 1Q’13 UK GDP report.
- No change: “Daily Slow Stochastics (5,3,3) have turned lower again, but remain in oversold territory; we are likely closer to a near-term bottom than top.”
- However, H4 Slow Stochastics (5,3,3) have issued a sell signal after hitting the H4 8-EMA, offering an idea level to stay short against. In this respect, new lows are likely.
- Yesterday I said that “a further breakdown in GBPUSD calls for an immediate retest of channel support at 1.5100 today.” The break of the daily RSI uptrend dating back to March, in conjunction with the H4 Slow Stochastics turning over, suggests that $1.5182 (61.8% Fib March low to May high) and 1.5100/20 are next on the agenda lower.
*Trend definitions: “uptrend” is defined as 8-MA>21-MA>55-MA; “downtrend” is defined as 8-MA<21-MA<55-MA; a “trendless” market occurs when continuity is absent.
*Scoring methodology: there are seven time frames, ascending from m15 (15-minutes) to W1 (one-week). In ascending order, each pair is assigned a value from -7 to +7 based on the trend apparent on the specified time frame (I.E. a m15 uptrend equals +1, whereas a H1 downtrend equals -3). If neither an uptrend nor downtrend is present, the trendless timeframe receives a score of 0. These points are totaled and the average is reported on the right. The strongest uptrend would achieve a score of +4.00, while the strongest downtrend would achieve a score of -4.00.
--- Written by Christopher Vecchio, Currency Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.