FxWirePro: GBP/USD bearish trend still robust as price, volumes, and OI move in tandem, Trend and momentum indicators to substantiate

On daily charts, price dips may extend up to next strong support of 1.2101 upon bearish convergence on DMAs (7DMA crosses below 21DMA which is a bearish convergence).

The current prices remain well below 7EMAs, the downswings have constantly been sliding through sloping channel with confirmation from both trend and momentum indicators (refer monthly charts).

Most importantly, please be noted that we have not isolated our analysis only on price behavior but monitored other two significant factors of technical analysis (i.e. volumes and open interest).

The massive volumes have been formed on this declining trend while rising open interest on declining price is the robust confirmation to the major bearish trend (refer monthly plotting).

RSI’s downward convergence at around 27 levels on weekly and at 38 levels on dailies signal the strength in downswings.

Stochastic curves on both time frames have been indecisive but momentum bearish bias.

MACD is not deviating from this bearish stance, signals the downtrend to prolong further with its bearish crossover.

Trade tips:

At this juncture, contemplating lingering bearish indications, on both hedging and speculative grounds we recommend shorting mid-month month futures as the underlying spot FX likely to target towards 1.20 levels end of Q1’2017.

Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

These margin requirements are determined by the exchanges and would usually be ranging from 2 to 10% of the full value of the futures contract.