Over the past trading day, the pound / dollar currency pair showed a high volatility of 107 points. As a result of which, we have an impulsive jump in the direction of the previously found fulcrum. From the point of view of technical analysis, we see 100% coincidence of the previously set forecast, thus, I congratulate everyone on the profit, and now on the details. In the earlier review, we already discussed the suspicious slowdown of 1.2285 / 1.2338 with the subsequent decline in volatility, where there were already prerequisites for a possible breakdown of the 1.2270 breakpoint, which as a result, happened. The subsequent move also coincided with the forecast, we headed precisely to the previously found point of the periodic support 1.2200 / 1.2210, where local stagnation occurred. Analyzing the hourly past fluctuation, we see that the main jump occurred in the period 06: 00-12: 00 [UTC+00 at the trading terminal], after which stagnation / pullback was seen.
As discussed in the previous review, traders have long held short positions, which cannot be said about speculators. Thus, they [speculators] were ready, analyzing price fixing points lower than 1.2270. As a result, everyone remained in profit.
Considering the trading chart in general terms [the daily period], we see that the recovery process resumed its course, winning back about 62% relative to the magnitude of the elongated correction. If the price is fixed below the level of 1.2150, real signals of the end of the elongated correction and, as a fact, the resumption of the global downward trend will already go. I remind you that the main support of the current trend is the range 1.1957 / 1.2000, with respect to which the existing move was created.
The news background of the past day contained data on producer prices in the United States, where they did not expect changes, but as a result, they got a slowdown from 1.8% to 1.4%. In fact, this news turned out to be a kind of deterrent from a further decline [GBPUSD], and we saw the very stagnation / pullback.
The information background ruled the ball once again, and just on it all the major leaps occurred, so let's analyze it. The main impulse of the decline was a phone call by German Chancellor Angela Merkel and British Prime Minister Boris Johnson. During which, Merkel made it clear that a Brexit deal was possible, provided that Northern Ireland remained in the EU customs union. That is, the approval of the Johnson plan is not just approaching zero, there are no chances. Against this background, the pound did not hold back and after a long stagnation flew down, the information flow did not end there. The head of the European Council, Donald Tusk, spoke sharply in the direction of the actions of Boris Johnson, reminding him that this is not a stupid game of accusations.
"@BorisJohnson, it's not about winning a stupid accusation game. The future of Europe and Britain is at stake, as well as the security and interests of our people. You don't need a deal, you don't need a delay, you don't need a cancellation, quo vadis?", As written on his twitter Donald Tusk @eucopresident
In turn, the President of the European Parliament, David Sassoli, during negotiations in Brussels with British Prime Minister Boris Johnson, stated that there was no progress in the negotiations.
"I came here with the firm hope of hearing suggestions that could move the negotiations forward. However, I must note that no progress has been made, "said David Sassoli
Today, in terms of the economic calendar, we have data on open vacancies in the United States labor market [JOLTS], which are expected to be reduced from 7.217M to 7.191M. The main event of the day is the publication of the text of the minutes of the meeting of the Federal Committee on Open Market Operations, as the contents of the protocol carries valuable information regarding further actions of the regulator. At the same time, do not forget about the spontaneous Brexit informational background, which may continue to put pressure on the market.
Further development
Analyzing the current trading chart, we see that the characteristic stagnation within the range of 1.2200 played out the interest of speculators, where jumps began to appear on the local oversold. In turn, traders captured the profit and divided into two fractions: the first decided to speculate on local overheating of short positions; the latter, on the contrary, are waiting for fixation lower than 1.2190 for a further gulf of short positions.
It is likely to assume that local surges in the direction of 1.2240-1.2260 are possible, but the main downward interest has not disappeared. Thus, the main positions are directed exactly down, towards the periodic level of 1.2150 [first point], and after fixing below the reference point in the form of the range 1.1957 / 1.2000.
Based on the above information, we concretize trading recommendations:
- We consider buying positions in the form of local surges. The game is risky and is designed more for speculators.
- We consider selling positions in the form of continuing the course and fixing the price lower than 1.2190, with the prospect of a move to 1.2150.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that, against the background of local surges, indicators in the short-term outlook signal purchases, while the main time periods retain its downward interest against the general background of the market.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 9 was built taking into account the time of publication of the article)
The volatility of the current time is 39 points, which is still a low value. It is likely to assume that if the emotional component remains on the market, the volatility of the current day will again be at high levels.
Key levels
Resistance zones: 1.2350 **; 1.2500 **; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support areas: 1.2205 (+/- 5p.) *; 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** The article is built on the principle of conducting a transaction, with daily adjustment