HKDGBP closes within prior day's range after lackluster session
Hong Kong Dollar/British Pound (HKDGBP) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
HKDGBP ended the week -1.2% lower at 0.0987 after flat today on low volume. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (HKDGBP as at Feb 14, 2020):
Friday's trading range has been 4 pips (0.41%), that's below the last trading month's daily average range of 7 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for HKDGBP.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, three candlestick patterns are matching today's price action, the Bullish Harami Cross Pattern and the Southern Doji which are both known as bullish patterns and one neutral pattern, the Doji. The last time a Doji showed up on December 20, 2019, HKDGBP gained 0.61% on the following trading day.
After trading down to 0.0986 earlier during the day, the FX pair bounced off the key technical support level at 0.0986 (S1). The failure to close below the support might increase that levels significance as support going forward.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Selling could speed up should prices move below the nearby swing low at 0.0985 where further sell stops might get triggered. As prices are trading close to February's low at 0.0977, downside momentum could accelerate should the currency mark new lows for the month.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Cross Pattern" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for HKD/GBP. Out of 3 times, HKDGBP closed lower 100.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 100.00% with an average market move of -1.96%.