USDGBP closes above its opening price after recovering from early selling pressure
US Dollar/British Pound (USDGBP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
USDGBP ended the month -5.23% lower at 0.7642 after edging higher 6 pips (0.08%) today on high volume. Trading up to 43 pips lower after the open, the currency managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (USDGBP as at Jul 31, 2020):
Friday's trading range has been 58 pips (0.76%), that's slightly below the last trading month's daily average range of 64 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for USDGBP.
After moving lower in the prior session, USD/GBP managed to close higher but below the previous day's open, forming a bullish Harami Candle. Additionally, two candlestick patterns are matching today's price action, the Bullish Spinning Top and the Takuri Line which are both known as bullish patterns.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and could now be heading back up towards the mean of the Bollinger Bands at 0.7865. The last time this happened on June 9th, USDGBP actually lost -0.17% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
With prices trading close to this year's low at 0.7537, downside momentum might speed up should the market break out to new lows for the year.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Takuri Line" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for USD/GBP. Out of 59 times, USDGBP closed lower 59.32% of the time on the next trading day after the market condition occurred.