HKDGBP breaks below Monday's low
Hong Kong Dollar/British Pound (HKDGBP) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
HKDGBP ended the month -0.48% lower at 0.1040 after tanking 9 pips (-0.86%) today on low volume. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 0.1041, the pair confirmed its breakout through the prior session low after trading up to 1 pip below it intraday.
Daily Candlestick Chart (HKDGBP as at Jun 30, 2020):
Tuesday's trading range has been 13 pips (1.24%), that's far above the last trading month's daily average range of 10 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for HKDGBP.
Even with a strong opening the forex pair closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, three candlestick patterns are matching today's price action, the Tweezer Top which is known as bullish pattern and two bearish patterns, the Bearish Closing Marubozu and the Black Candle. The last time a Tweezer Top showed up on May 25th, HKDGBP actually lost -1.13% on the following trading day.
Prices are trading close to the key technical support level at 0.1035 (S1). Unable to break through the key technical resistance level at 0.1052 (R1), the market closed below it after spiking up to 0.1053 earlier during the day. The failure to close above the resistance might increase that levels importance going forward. After having been unable to move lower than 0.1041 in the prior session, the currency found buyers again around the same price level today at 0.1040.
HKD/GBP shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Closing Marubozu" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for HKD/GBP. Out of 68 times, HKDGBP closed higher 58.82% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 57.35% with an average market move of 0.65%.