GBP/USD: Levels,Ranges and Targets

GBP/USD will see serious changes in the next 24 to 48 hours of trading from the Sunday opening to Tuesday.

The stated market sell gift on GBP/USD rises on Brexit was a true gift. The explosive move upon us occurred. The 1000 pip move mentioned occurred. EUR/USD 215 maximum monthly pip ranges from 1.1200 violated on brexit above by 10 pips from Maximum 1.1415 to 1.1425. The downside at 1.0995 violated by 83 pips to 1.0912 and 15 pips from reported 1.0927. Ranges held for 17 trading days, 19 to include Sunday openings.

GBP/USD must go far higher. The caution area comes at 1.4200 to 1.4380. The caution area means the break points are located at 1.4386 and 1.4459 and the same break points from last week. Most important to the caution area is GBP/USD price could normalize at this point and volatility could fall to normal trading as the vast majority of current oversold is relieved.

At 1.4380 for example, next above points turn to 1.4395 and 1.4503. On a break of 1.4386, next points remain 1.4395 and then 1 pip up at 1.4504. GBP/USD will continue to struggle higher from 1.4386. At 1.4386, easy trades are over and its back to analysis.

Longer range targets, 1.3811 and 1.3936. Targets and GBP/USD will be focus all week.
The big base point is located at 1.3508. The big base point means prices between 1.3508 and 1.3996 are literally bottomed on the floor.

Further concerning aspect to GBP/USD 1.4386 is USD/JPY is low, flat on the floor and highly oversold. Once GBP/USD settles, USD/JPY may begin a massive move higher.

Big base points in USD/JPY are located at 101.68 to 101.21 then 100.90 and 100.06. On a break lower at 99.62, USD/JPY could remain lower for longer as USD/JPY must decide as was the case in 2008 the impending Realignment.
Big break points above in USD/JPY, 103.81 and 106.31.

For GBP/USD, Most important points on the way up, 1.3808, 1.3949, 1.3996, 1.4183, 1.4230, 1.4323, then 1.4386.

GBP/JPY correlations to GBP/USD from high +90%, now +60.

GBP/USD will be volatile but direction is higher, much much higher.

Brian Twomey, Inside the Currency Market, btwomey.com

S&P’s and VIX 500: Levels, Ranges, Targets

The S&P’s closed Friday at 2018.25 and experienced two vital break points below the 1 and 2 year monthly averages: 2027.59 and 2020.72 To go higher, not only must 2020.72 and 2027.50 break but next vital points exist at 2043.50 and 2052.00.

Next important point levels below are located at the 3 and 4 year monthly averages at 1952.63 and 1836.23. To achieve 1952.63 breaks must occur at 1999.79 and 1978.87. To achieve 1836.23, not only must 1999.79 and 1978.87 break but 1923.12 as well.

In a larger picture from monthly averages 1 to 10 years, S&P’s prices are located from 2020.72 to lows at the 8, 9 and 10 year averages located: 1489.25, 1482.06 and 1475.75. Any significant rises are stopped by overbought averages at the 8, 9 and 10 year. Currently, the 8, 9 and 10 year averages are middle range overbought territory. Middle range overbought means the best the S&P’s can achieve is 2699.27, 2671.63, 2650.78, 2627.55 and 2566.75.

Yet any significant drops are stopped by 2020.72 and 2027.59. The best current prices can achieve below are 1845.84 and 1822.78. The range and averages explains why targets are found from 2082.51 to 1839.42.

Closer to home, the 5, 10 and 20 day averages reach bottoms at 2007.67, 2022.90 and 2024.65. The points at 2022.90 signifies 2024.65 are currently out of bounds from the close at 2018.25. Targets call for higher from 2056.98 to 2066.01. Targets assume averages break at 2020 and 2027. Both are key to rises. Viewed from the overbought VIX then rises in the S& P’s are valid.

Correlations in the S&P’s to the VIX runs from negative 74% at the 1 year monthly average to lows at the 7 year at minus 59%. The most important averages from a correlational perspective is the 3 and 4 year as the 3 year records zero and 4 year at minus 0.02.

From the 25.76 Friday close, the 8, 9 and 10 year averages drive prices as all crossed above averages from 1 to 7 years. The 8, 9, and 10 year averages are located at 21.74, 21.64 and 20.67. A break of 20.87, next comes the 7 year average at 19.20 then the 1 year average at 18.73 and 6 year at 18.17.

Most immediate price drivers are the lowest 3 and 4 year averages at 16.21 and 16.19. Any price rises are stopped by those averages. Currently, both averages are far overbought. From the 25.76 close, upper prices are at extreme overbought levels at 27.98 and 26.77.

Overall the VIX warrants a correction and supports the case for an S&P rise. Targets overall are found from 19.71 lows to 31.12 highs. On a larger scale, the VIX can easily handle prices in the 30’s as the 19.71 target lows are found in the 4 year average. Remainder average targets reveal prices hold above the 8, 9 and 10 year averages at 21.74, 21.64 and 20.67.

Brian Twomey, Inside the Currency Market, btwomey.com