GBPUSD Range Bound

GBPUSD Range Bound

Will the Sterling, aka GBPUSD, remain in the range until central bank announcement on Thursday?

GBPUSD Range Bound
GBPUSD Range Bound Getty Images

Although the GBPUSD has recently made new lows, the Stochastics on the 240-minute chart is currently indicating potential trend divergence and is beginning to turn upwards ahead of the Bank of England Rate Announcement on Thursday at 7am New York time.  Additionally, on Wednesday afternoon (UK time), another vote is expected on the U.K.'s exit strategy.  The vote is expected to be very tight and, depending on the vote, could cause volatility in the Sterling currencies.

GBPUSD Range BoundMulticharts GBPUSD 240-minute Chart

While the range can be faintly seen on the 240-minute chart, it is very clear if you zero down to the 15-minute chart.  The chart below shows a blue line indicating the high of the range and a red line indicating the low of the range on both price and the Multicharts Cumulative Delta feature.  Notice how strong buyers came in at the beginning of the range, right at the low.  However, the buyers received very little reward for all the effort they put into pushing price higher.  So what happens?  Price returns to test the prior low but notice how the sellers are reducing (weakening) as price returns to the low.

GBPUSD Range Bound Multicharts Cumulative DeltaMulticharts GBPUSD 15-minute Chart with Cumulative Delta

The key will be if the buyers can actually push price higher this time around.  Remember the last time they received very little reward for all the effort they put into pushing price higher.  Will this time be different?  The testing of the low, on numerous times, with a bullish bar forming each time, makes this pattern a likely bear trap candidate because on the last two tests of the low, price exceeded the low but then closed above.  A bear trap is indicative that the market will go higher and break through the overhead resistance.  While most volume indicators do not show the actual buyers and sellers on each bar, with the Cumulative Delta it is much easier to see because it reveals the buyers and sellers behind every bar.

 

 

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