GBP/USD: Buy/Sell On Daily Range Expansion Has Logic

2019年2月18日

At the most granular level, the pair is starting to show clear signs of life after price broke above an intraday swing high at 1.2870–75. However, with the 3rd test of a descending trendline coming overhead at 1.2935–40 ahead of a horizontal resistance at 1.2950, the room for further appreciation appears to be rather limited. What’s more, the stochRSI is starting to reach overbought conditions, suggesting that a potential pullback intraday is likely to ease the overstretched conditions.

From an intermarket flows (IMF) perspective, we can clearly see via the 5-day correlation coefficient how the UK-US yield spread and the DXY inverted have acted as a formidable proxy to gauge the next market directions. Under such prognosis, we can notice that based on micro IMF, we are still in a buy-side mode based on the DXY with more of an indecision according to the yield spread as the microflows based on the 25-HMA have turned flat. If a retest of the green box is accompanied by a sync upward slope in the DXY + UK-US YS, that may be a solid buy-side opportunity, which would be in line with the upward slope in the 25-HMA based on the most important factor, the price. From a macro view, with the 125-HMA (5-DMA) slope in sync bearish mode, a test of 1.2935–50 liquidity area represent a sell-side opportunity on such a macro backdrop, with the only nuance that may represent an impending risk being sync micro bullish flows in DXY/UK-US YS as the level is tested.