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01:06 GBP/USD undergoes corrective process

An upward and over extended market, set against the backdrop of a downtrend may swing the GBP/USD buyer-seller pendulum back towards the bears again.

GBP/USD was in sell mode until a recent move changed the shape of the price structure. The 4hr RSI was on average printing below 50% over the last three weeks and recently broke above the 60% mark. This can be considered overbought territory in the context of a full-fledged bear market. Therefore, the present corrective rally is vulnerable for a turnaround from here.

Further, the 50SMA is still below the 200SMA on 4hr charts. However, should the pair extend its recovery from multi-week lows into a new trend, traders may require a contingency plan in place.

01:03 AUD/NZD lurched lower and hesitated

A harami cross pattern unfolded on the AUD/NZD daily chart turning the intermediate trend from bearish to neutral.

The pattern occurs within the context of deteriorating prices unfolding with the daily stochastic (14,3,3) tracking below 20. From here on, this oscillator could easily react with any future close near the highs, especially since yesterday's trading range formed a doji line on the chart. Highlighting the lack of trendiness is the 1-hour ADX indicator which dipped below 30 in today's trading.

Note the harami cross is considered a more potent reversal than the regular harami.

01:02 USD/JPY momentarily out of favor

USD/JPY showing very low price volatility across several time frames.

Intraday and daily USD/JPY ATR measures, up from 30 min, simultaneously shrunk to levels not seen in the past four weeks of trading. Markets with extreme low volatility do not perform well because they have less direction for trend following and less volatility for mean reversion. It is advised to wait for an expansion of volatility before entering USD/JPY.
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Data source: FX Street
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