Forex Market: GBP/BGN trading outlook for January 18th

Friday’s trade saw GBP/BGN within the range of 2.5436-2.5982. The pair closed at 2.5556, plummeting 1.51% on a daily basis, or at the sharpest rate since December 3rd, when it lost 1.71%. It has been the sixth drop in the past ten trading days. In addition, the daily low has been the lowest level since January 21st 2015, when a low of 2.5342 was reached. In weekly terms, GBP/BGN lost 1.73% of its value during the current week, while marking its eighth consecutive weekly decline. The pair has fallen 3.72% so far during the current month, following a 4.76% slump in December. The latter has been the steepest monthly decline since January 2013.

On Monday (January 18th) support is likely to be received in the area around the low from January 15th (2.5436). A break and close below it may target the low from January 21st 2015 (2.5342). Resistance, on the other hand, may be encountered at the hourly 21-period EMA (2.5661), then – at the hourly 55-period EMA (2.5803) and finally – at the hourly 100-period EMA (2.5912).

No relevant macroeconomic reports and other events, which may influence GBP/BGN trading, are scheduled on Monday.

Correlation with other currency pairs

Taking into account the week ended on January 14th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

GBP/BGN to GBP/USD (0.9939, or very strong)
GBP/BGN to USD/BGN (0.9546, or very strong)
GBP/BGN to AUD/USD (0.8613, or very strong)
GBP/BGN to NZD/USD (0.8515, or very strong)
GBP/BGN to USD/JPY (0.7669, or strong)
GBP/BGN to DKK/BGN (0.5700, or strong)
GBP/BGN to CHF/BGN (0.4894, or moderate)
GBP/BGN to USD/CHF (0.2167, or weak)
GBP/BGN to EUR/USD (-0.9408, or very strong)
GBP/BGN to USD/CAD (-0.9821, or very strong)

1. During the examined period GBP/BGN moved almost equally in one and the same direction with NZD/USD, AUD/USD, USD/BGN and GBP/USD. This relationship has been the most pronounced between GBP/BGN and GBP/USD (almost perfect correlation).

2. GBP/BGN moved almost equally in the opposite direction compared to EUR/USD and USD/CAD during the week.

3. The correlation between GBP/BGN and USD/CHF was insignificant.

4. GBP/BGN moved strongly in one and the same direction with USD/JPY and DKK/BGN during the period in question.

Daily and Weekly Pivot Levels

By employing the traditional calculation method, the Monday pivot levels for GBP/BGN are presented as follows:

Central Pivot Point – 2.5658
R1 – 2.5880
R2 – 2.6204
R3 – 2.6426

S1 – 2.5334
S2 – 2.5112
S3 – 2.4788

By using the traditional method of calculation again, the weekly pivot levels for GBP/BGN are presented as follows:

Central Pivot Point – 2.5746
R1 – 2.6056
R2 – 2.6556
R3 – 2.6866

S1 – 2.5246
S2 – 2.4936
S3 – 2.4436