USDGBP finds support at 50-day moving average
US Dollar/British Pound (USDGBP) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, USDGBP finished Wednesday at 0.7712 losing 47 pips (-0.61%) on high volume. Closing below Tuesday's low at 0.7736, USD/GBP confirmed its breakout through the previous session low after trading up to 48 pips below it intraday.
Daily Candlestick Chart (USDGBP as at Sep 16, 2020):
Wednesday's trading range has been 79 pips (1.02%), that's slightly below the last trading month's daily average range of 81 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for USDGBP.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on August 28th, USDGBP lost -0.12% on the following trading day.
After trading as low as 0.7688 during the day, the market found support at the 50-day moving average at 0.7703.
While the pair is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Selling might accelerate should prices move below the close-by swing low at 0.7671 where further sell stops could get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 50" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for USD/GBP. Out of 67 times, USDGBP closed lower 53.73% 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 59.70% with an average market move of -0.36%.