2022/11/27 (118) Technical Analysis – GBPUSD

British Pound Hits 14-Week High Vs. The US Dollar
– We Remain Long In Our GBPUSD 4XSetUp, Into Year 2023!


A Strong GBPUSD Cross Pair Is On The Other Hand More Or Less Always A Weak DXY
– That`s Why We Shouldn`t Ignore Some Key Technical Price Action Zones Across The DXY

99.910 points on 2022/02/20 was the intraday high before the corona virus outbreak crash – and that before as the stock market crashed.
94.650 points on 2002/03/09 was the intraday low crash while the corona virus outbreak – and that as the stock market started to crashed.
102.992 points on 2022/03/20 was the intraday high while the corona virus outbreak crash – and that more or less around stock market lows.

These price action zone is important – yes even essential. Because, if the DXY falls back into this price action zone (betwenn 102.992 and/or 94.6450 points) we can technicly argue that if the DXY is trading within this zone, the long-term uptrend has been briefly broken. And then we have to ask ourselves the question in the medium term? What’s next?

99.667 points on 2018/10/01 was the yearly high 2019
97.693 points on 2018/11/12 was the yearly high 2018
103.820 points on 2017/01/03 was the yearly high 2017
103.650 points on 2016/12/16 was the yearly high 2016
100.510 points on 2015/12/02 was the yearly high 2015

The dollar index held below 106 on Friday and was on track to end the week lower, weighed down by expectations that the Federal Reserve would tighten less aggressively in the upcoming meetings. The latest Fed meeting minutes showed that a substantial majority of policymakers agreed it would likely soon be appropriate to slow the pace of interest rate hikes. Earlier this month, the Fed delivered its fourth straight 75 basis point rate increase in an effort to tame stubbornly high inflation, pushing borrowing costs to the highest levels since 2008. The central bank now wants to assess the impact of its historic tightening campaign on the economy, with recent softness in US economic data supporting the case for more moderate moves. The dollar is set for a weekly loss againstother major currencies, but remains up week-to-date against the Chinese yuan amid a worsening Covid outbreak in China.

However Let`s Focus Back On The Last Price Action Of The 10Y Yields And/Or Stock Markets On Both Sides

The yield on the US 10-year Treasury note, seen as a proxy for global borrowing costs, consolidated around 3.7%, a level not seen since October 4th, as the narrative started to change from inflation and tightening to recession and the likelihood of a policy pivot. Minutes from the last Federal Reserve meeting showed officials see the case for a slower pace of interest rate rises. The November meeting minutes also showed that policymakers were growing concerned about the economy’s health, with officials noting that a recession is now almost as likely as their baseline projection of weak growth. This outlook for monetary policy is decoupling from the one seen for Europe, in which the ECB reassured markets that its tightening cycle is far over despite the continent heading for a recession in the last quarter of 2022. Germany’s 10-year Bund yield, the European benchmark, rebounded from a two-month low to around 1.9%. The yield on the UK’s 10-year Gilt steadied around 3%, remaining close to its lowest level since early September, on hopes that central banks might not end up hiking as aggressively as feared. Earlier this week, the minutes of the Fed’s November policy meeting showed that a “substantial majority” of policymakers agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes. Elsewhere, investors digested remarks by few Bank of England officials. Deputy Governor Ramsden backed more interest rate hikes, but said he would consider cutting rates if the economy developed differently to his expectation and persistence in inflation stopped being a concern. MPC member Tenreyro said she saw rates on hold this year and then falling in 2024, while Dhingra has warned that an over-tightening of policy could stoke a deep recession. Markets are now split between pricing a 50 and 75 bps hike in December, after the central bank has raised rates by 290 bps since December 2021.

The Dow and the S&P 500 were virtually flat on Friday as investors reassessed the outlook for monetary policy while looking for clues on consumer health as Black Friday shopping started. The Nasdaq underperformed, falling roughly 0.5%, with a slight increase in Treasury yields and a stronger dollar enough to spook investors away from high-growth and tech stocks. Investors continued to parse the minutes from the last Fede meeting, with policymakers seeing the case forslower interest rate hikes while recognizing that recession risks are rising. Meanwhile, Amazon employees worldwide, including those in the US, Germany, and France, were expected to go on strike today. In other corporate news, production of Apple iPhones could fall by at least 30% at Foxconn’s Zhengzhou plant after worker unrest over coronavirus-related restrictions disrupted operations. Still, the three indexes are poised to end the Thanksgiven week, in which trading volumes were substantially thin, up more than 1%. The FTSE 100 index closed just shy of the 7,500 level, the highest in three months, driven by gains in energy and industrials. In the lack of fresh catalysts, investors continued to parse the latest remarks from the ECB and the Federal Reserve. Minutes from the ECB’s last meeting showed that policymakers remained committed to raising rates, even in a case of a recession. While the ECB seems to be far from ending its tightening cycle, the minutes of the Fed’s November meeting showed that a substantial majority of policymakers agreed that soon it would be appropriate to slow the interest rate hikes. On the corporate side, Frasers Group and Imperial Brands rose more than 1% each to lead the FTSE 100, while Endeavour Mining was among the biggest laggards, down nearly 2%. The FTSE 100 rallied roughly 1.5% this week, recording its second consecutive weekly gain.

GBPUSD Hits 14-Week High Of 1.2147 Last Week

In the past week, the sell-off zone during the corona virus outbreak was overcome. Basically a good bullish signal – but it has to be confirmed in the coming days and weeks. A short-term drop below 1.1950 to 1.1414 still confirms the long-term trend reversal formation, which we are calculating for this long 4XSetUp. However, further price action between 1.1950 and 1.1414 should cloud medium-term prospects for the time being. Which I’m not assuming – but I don’t want to rule out a relapse, I can’t rule it out. Therefore, the preliminary target is to defend 1.1950 by the end of 2022. So that we can then retrospectively argue from a medium-term trend reversal formation at the beginning of 2023 – which will then hopefully be confirmed in a long-term formation by summer 2023.