Free TCI Forex Signals: GBP/USD

We will examine the Forex pair GBPUSD, which is currently trading within an uptrend channel. What’s interesting about GBP/USD is not just the uptrend itself, but the likelihood of significant fluctuations happening, either inside or outside this channel.

TCI Signal on GBP/USD & TCI Chart

First, let’s review the results of our previous TCI signal on gold.

Evaluating the Previous TCI Signal on Gold

In our last TCI signal, we predicted a bull rally in gold prices with two main targets: $1,419 and $1,459 per ounce. By today, April 28, both targets have been reached. Gold rose steadily, with only minor pullbacks near key resistance levels. This has likely been a rewarding experience for bullish day traders. The best trades happen when a market is technically oversold but fundamentally stable—and that’s exactly what we saw with gold.

» Here is our latest TCI signal -On the price of gold

GBP/USD Technical Analysis

The chart below shows the GBP/USD Forex pair from May 31, 2010, to May 26, 2013. At the bottom of the chart, you’ll find the TCI chart for GBP/USD over the same period.

Read more: GBPUSD April 2013

 📶 Forex Trading Analysis July 2013

The summer has yet to bring new developments in the Forex market and currency fluctuations. There is a sense in the air that the global monetary “status quo” is about to change within the next 3–4 months. The FED is altering the rules of the game and preparing world markets for a new monetary policy. In our last Forex Report (two weeks ago), we forecasted that the good days for the Euro against the US Dollar were coming to an end.

At that time, EURUSD was trading around 1.3120, while today it trades near 1.2830. The mid-term trend for EURUSD is bearish, but the short-term outlook is much more complex (see the TCI analysis at the end of this report).

Here’s what’s coming next:

📝 A Brief Analysis of What Lies Ahead

Following its recent announcements, the FED is preparing global markets for higher US interest rates. With improving unemployment figures, the FED’s main concern is shifting toward managing upcoming inflation. This will likely lead to higher interest rates after summer 2013. Higher rates (currently at 0.25%) will make US bonds and the US Dollar more attractive to both domestic and foreign investors, strengthening the US Dollar—especially against the Euro. A stronger US Dollar also causes commodity prices, which are valued in USD, to decline. This happens because, as the USD appreciates, commodities must devalue to maintain their real value and preserve the balance between real demand and supply. This mechanism explains why gold prices have dropped over the past few weeks as the USD has strengthened.

■ US Interest Rates (↑) → USD (↑) → Commodity Prices (↓)

Read more: Free Forex Trading Signals EURUSD JULY 2013

The Previous EUR/USD Trade Signal Confirmation

The previous TCI signal proved to be quite accurate. In our last TCI analysis on EUR/USD, we warned of an upcoming US Dollar gain against the Euro. At that time, EUR/USD was at 1.3089 (February 25, 2013). We targeted the 1.2910–1.2920 area and suggested that a strong turnaround would likely occur once EUR/USD reached this level.

◘ Previous TCI Signal Details: 

-EUR/USD (2/25/13): 1.3089

-Target Price: 1.2910–1.2920  {» What is Trading Center Indicator?}

The New TCI Signal on EUR/USD & TCI Charting

Here is the EUR/USD historical Line Chart (since 1999) along with the corresponding TCI chart for the same period. Today, the TCI is around -8.0%, indicating oversold conditions.

Chart: EUR/USD Historic Line Chart & TCI Chart (January 1999 – March 2013)

Read more: EURUSD MARCH 2013

The EURUSD exchange rate is falling as economic and political risks in the Eurozone increase. Recent events, including uncertainty after the Italian elections, are pushing the Euro lower against the US Dollar. The Eurozone is expected to face a recession in 2013, with growth not anticipated before 2014, making a cut in the Euro interest rate likely.

Technical Analysis on EUR/USD Using TCI+ Indicator

The Trading Center Indicator (TCI) is a technical analysis tool that can be applied to any financial market. In this analysis, a new version called TCI+ is introduced, designed specifically for the Forex market. Two EUR/USD charts follow, covering the same period from January 1999 to February 2013. (» Trading Center Indicator)

Chart: EUR/USD 1999-2013

Read more: Free Trading Signals: TCI ON EURUSD February 2013