The pound / dollar currency pair continues to maintain high volatility, this time with an amplitude of 196 points. From the point of view of technical analysis, we see that the quote found a foothold in the face of the level of 1.2620, where, after a slight slowdown, form an impulse move, as a result, breaking the peak on October 11 [1.2704] and heading towards the key value in the face of range level 1.2770. In fact, we see that speculative interest persists more than ever, and emotion and hopes for a brighter future push the pound into heaven. Analyzing the past hourly hour, we see that the surges were variable and were present both in the morning at 6:00 [UTC+00 time at the trading terminal] and in the afternoon at 14:00 UTC+00, where the main market move took place. We will analyze the causes and effects a bit later.
As discussed in a previous review, speculators had an excellent trading session. Thus, in the morning, the first profit was taken against the background of the 6:00 UTC+00 jump, where the tactics were pretty simple, analysis of the morning range and its breakdown. I understand that not everyone gets up early, but the market is now generous and makes it possible to earn in the morning / afternoon and even in the evening. With this reason, our recommendation in terms of focus on 1.2710 worked, and even who loves to sleep managed to earn at the price jump at 14:00 UTC+00.
Considering the trading chart in general terms [the daily period], we see that things are not very good in terms of considering global changes. Thus, the main downward trend turned out to be hit hard by buyers who managed to throw a quote up to the second correction in order [1.2770 - 06/25/19]. It will be hard to say whether there will be a change in the trend, it all depends on political steps, but the fact that we have already managed to bounce off historical lows by more than 840 points is a fact. One of the most interesting points when considering the daily chart is that the main move declined in the last four trading days, where about 600 points of the upward move were made. That is, we see vertical growth, which can be characterized as emotional, and not a fact,
The news background of the past day had a package of statistics for the UK, where the unemployment rate rose from 3.8% to 3.9%. In turn, the average level of salaries excluding bonuses (Aug.) accelerated to 3.8%, and the data on the level of salaries from salaries, including bonuses, slowed down from 3.9% to 3.8%. The pound did not react to statistics, since the main driver of the current week is the information background.
Due to this, Prime Minister Boris Johnson is getting closer and closer to reaching an agreement on Brexit, after the concessions that he made in response to EU demands for the status of the Irish border. The concessions in this case are at least some steps in favor of the so-called "back-stop", where the negotiators agreed on the establishment of a border customs service in the Irish Sea.
The main incentive for yesterday's jumps was the statement by Michel Barnier, the EU's chief negotiator for Brexit, who was optimistic about the current negotiations and, according to preliminary estimates, said that there was a chance to conclude a deal this week.
There are so many expectations, and even more emotions, there is only one "BUT", whether the British Parliament approves the agreement, as far as we remember, the predecessor [Theresa May] failed to do so.
Today, in terms of the economic calendar, we have data on inflation in the UK, where they expect acceleration from 1.7% to 1.8%. In the afternoon, we are waiting for data on retail sales in the United States, where they expect a slowdown of 4.1% to 3.8%. At the same time, the information background will continue to torment the emotions of speculators, as negotiations on the divorce proceedings continue.
Further development
Analyzing the current trading chart, we see that the range level of 1.2770 still plays the role of resistance, slowing down the quote, but for how long it will last. If we analyze the current situation in more detail, we see that the level of 1.2770 has a lot of confirmations on history, and the current overbought can play into the hands of sellers, eventually adjusting the pound. This development also has a reverse picture, called information noise, and so, from personal experience, we have already seen that any hints, rumors, statements about Brexit push the quote up / down, regardless of the strength of a particular technical element. Thus, careful monitoring of news feeds of such publications as Bloomberg, Financial Times, Reuters, is simply necessary in the current situation.
In turn, speculators with huge profits over the past days continue to work, since such a chance to ride on ultra-high volatility appears infrequently. Work is carried out immediately in both directions relative to the range level of 1.2770.
It is likely to assume that the fluctuation within the 1.2770 level will not last very long, and it is worthwhile to carefully monitor the behavior of quotes relative to the 1.2730 / 1.2800 boundaries. That is, locally detect price spikes. Transactions may not be so long, but there will be enough profit to cover all costs. I repeat once again, do not forget about the information background in terms of monitoring, since the main jumps will be sharpened on it.
Based on the above information, we concretize trading recommendations:
- We consider purchase positions in case of price fixing higher than 1.2800.
- We consider selling positions in case of price fixing lower than 1.2730, with the prospect of a move to 1.2620.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators due to the massive informational background are subject to a false opinion. Thus, the intraday and medium term prospects retain upward interest due to impulses. On the other hand, the short-term outlook fluctuates due to the existing stagnation, trying to enter the stage of correction.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 16 was built taking into account the time of publication of the article)
The volatility of the current time is 56 points, which is pretty good for the start of trading. It is likely to assume that high volatility will continue due to the massive information background, coupled with the emotional mood of the market.
Key levels
Resistance zones: 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support Areas: 1.2700 *; 1.2620; 1.2580 *; 1.2500 **; 1.2350 **; 1.2205 (+/- 10p.) *; 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