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Market Analysis

Intraday technical analysis of GBPUSD

June 11, 2019
BY Michael Stark

The one-hour chart of pound-dollar (GBPUSD; ‘cable’) clearly shows us an overall small upward movement with relatively high volatility. Two levels of potential significance exist on the chart. The first is a resistance in the area of 1.276 and the second a support around 1.265. Given the fairly low reliability of areas on lower timeframes, these levels are probably not very strong. However, they might still withstand testing. Based on today’s trading so far, the important psychological area of $1.27 seems to be more important.

Technical indicators on GBPUSD H1

Moving averages in general give a buy signal. Price is currently above all three of the 50, 100 and 200-period simple moving averages. We can observe a golden cross of the 50 and 200 SMAs around this time last week and another golden cross of the 100 and 200 SMAs last Thursday morning GMT.

The fairly strong bounce from the area of the 200-period SMA yesterday morning seems to confirm that area’s importance as a support. Conversely, it seems unlikely that the other SMAs here will soon function as supports on this timeframe given that price has only recently moved back above them. MACD (12, 30, 9) continues to generate a buy signal with the histogram above zero and the signal line. Convergence of these indicates that momentum is slowing, though.

Bands (20, 0, 2) remain fairly wide, suggesting that volatility might continue on this timeframe. They also tell us that the pound has recently been overbought given the large wicks outside the upper deviation. On the other hand, slow stochastics (15, 5, 5) have not indicated overbought since last week. The main stochastic line could soon cross below the signal line, but this is a less reliable signal when it occurs outside a zone of saturation.

Price action

Price action on this timeframe has been somewhat inconsistent. So far this week, saturation (based on Bands) and areas of psychological resistance have been more important factors.

The gravestone doji shortly after this morning’s news appeared to indicate a potential downside. However, we can clearly see a classic upward engulfing pattern only two periods later. The present candle could form into either an upward rejection or a dragonfly doji. In either case, this would be a buy signal; completion of the pattern would provide confirmation.

Technical analysis GBPUSD: summary

Intraday technical analysis of GBPUSD suggests a period of consolidation and relative stability. Given the pound’s recently volatility, though, traders should follow fundamental developments closely.

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