Trade Idea (2020-10-12) GBP is reaching critical point

Trade Idea

Good morning.

Last Friday’s US stocks continued to rise. The optimistic mood continued, with all three stock indices closing in the bullish candles for the second straight week. (Despite the plunge last Friday due to the president’s infection of COVID-19.)
Earnings results of US companies will begin in this week.

Foreign exchange market also continued to be in risk-on mood. The currency strength was “NZD> AUD> GBP> EUR> JPY> USD” as a typical risk-on order (Please see currency strength below).

GBPUSD has recovered to 1.30. Since mid-September, 1.30 line has been strong upside resistance, so the move from this week must be watched carefully. This week, attention will be paid to the movement around Oct 15, which UK has set as the deadline for trade negotiations with EU. Forex market expects this deadline to be extended.

[Status of Daily 20MA]

  • Currencies stronger than Daily 20MA (against USD): EUR, NZD, AUD, GBP, CHF, CAD、CHY
  • Currencies weaker than Daily 20MA (against USD): JPY

On last Friday, many currencies such as EUR, NZD, AUD, GBP and CHF crossed Daily 20MA.

[Status of Daily Bollinger Band]

EURUSD: Parallel transition (reaching +1σ)
GBPUSD: Expansion first move (exceeded + 2σ) and exceeded 1.30 resistance
AUDUSD: Parallel transition, slightly downward (3 consecutive bullish candles, not reached +1σ yet)
NZDUSD: Parallel transition (long bullish candle, not reached +1σ yet)
USDCHF: Parallel transition (reached +1σ)
USDCAD: Parallel transition (reached -2σ with 3 consecutive bearish candles)
USDJPY: Parallel transition with a slight contraction (breaking below +1σ)
CADJPY: Parallel transition with contraction (reached +2σ with 3 consecutive bullish candles)
USDCHY: Parallel transition, downward (exceeded -2σ)

EURUSD H1 (Please click the chart to enlarge.)

GBPUSD H1 (Please click the chart to enlarge.)

AUDUSD H1 (Please click the chart to enlarge.)

USDCAD H1 (Please click the chart to enlarge.)

CADJPY H1 (Please click the chart to enlarge.)

USDCHY H1 (Please click the chart to enlarge.)

Market Environment

Yesterday’s currency strength

US market yesterday

DJIA: 28,586.9 (+161.39 +0.57%)
NASDAQ: 11,579.94 (+158.96 +1.39%)
S&P 500: 3,477.13 (+30.3 +0.88%)
GOLD: 1,936.3 (+41.2)
OIL: 40.52 (-0.67)
US 10-YR: 0.779 (+0.012)
VIX 25: (-1.36)

Asian market today

Nikkei: 23,548~ (-71)
CME Dow future: 28,449~( -137 Dow)

Economic indicators today

Today we will have no critical economic indicators.
Today is holiday in US and Canada. (But US stock market will be open)