4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - up.
The moving average (20; smoothed) - up.
CCI: 100.5554
The GBP/USD currency pair managed to slowly reach the Murray level of "6/8" - 1.3000, which last appeared on October 21. We believe that before overcoming this level (even the area of 1.2970 - 1.3010), it does not mean that the pound will go up. Moreover, from our point of view, the fundamental factors for the growth of the pound were few and remain the same. In the first two trading days of the week, it became known that the indices of business activity in the construction and manufacturing sectors of the UK slightly improved, but remained in the "area of decline". Thus, there are no special reasons to open champagne now. Recall that the Bank of England at the next meeting may go to the easing of monetary policy. If this happens, the pound may be under serious pressure from market participants. And the British regulator can take such a step based on the same macroeconomic statistics, which, unlike traders, it cannot ignore.
Today, as in many other countries, the UK will publish an index of business activity in the services sector, and, like the previous two indices, it is likely to remain below the mark of 50.0. Thus, in principle, it is not even particularly important whether the value of the indicator will grow compared to the previous month, whether the real value exceeds the forecast, all the same, the decline in the service sector will continue. But in the States, both PMI may be well above the critical mark of 50.0, especially the ISM index, which is considered more significant. In this case, the US dollar paired with the pound will again have every reason to strengthen, but market participants are likely to ignore macroeconomic statistics today. Traders still do not pay any attention to macroeconomic reports, as they believe that at this time they are completely unimportant. The parliamentary elections, which will be held on December 12, are important now. What awaits the British currency after December 12 is even scary to imagine. First, it is not known how the elections will end. If there is no clear victory for the conservatives, it could greatly disappoint the markets, which have been preparing for this victory for more than a month. Secondly, traders can recall at once all the failed macroeconomic statistics that came out in Albion in the last month. Thus, we believe that the weak upward movement may continue until December 12-13, and the pound/dollar pair may remain inside the side channel. Anyway, until December 13, we do not expect the completion of the flat and the resumption of the trend movement.
Meanwhile, between Boris Johnson and Jeremy Corbyn, as between the two main rivals in the election, fierce squabbles continue, which are already crossing "all the boundaries of what is allowed." As recently as yesterday, Boris Johnson said that Corbyn poses a threat to the security of the UK. According to the Prime Minister, if the Labor Party leader leads the government, then immediately "bow to the opponents." According to Johnson, the confirmation, which is very difficult to find, Corbyn repeatedly sided with "the IRA, Palestinian terrorists, and the Kremlin." Boris Johnson also urges every citizen of the country not to sit at home on December 12, but to come to the elections and "decide the fate of the country": "The people must come and vote to ensure the independence of our country because otherwise Brexit will simply not be implemented. Citizens must come and vote to prevent chaos in parliament next year. The British should come and vote in order not to allow the Labor party to shake the economic foundations of our country. And they should come and vote for a bright future and a new golden age."
In light of such an impulsive statement by Boris Johnson, it only remains to wait for the 2019 election and "go and vote." From a technical point of view, as we have already noted, the key level remains 1.3000. If the pair manages to overcome it, the upward movement can continue. Otherwise, the quotes will remain inside the side channel with the lower border around 1.2780.
The average volatility of the pound/dollar pair for the last 5 days is 68 points, for the last 30 days - 72 points. Thus, on average, the pair goes about the same distance each day. This perfectly reflects the mood of traders in the forex market, which in the last month are waiting for the parliamentary elections. For the British currency, the volatility of about 70 points per day is considered if not "very low", then "weak". The usual values are more than 100 points per day. Based on this, it is unlikely that today traders will be able to go above the level of 1.3060 or below 1.2924. Based on this, the sale of the pound today is completely impractical - the level of 1.2924 is near the moving average.
Nearest support levels:
S1 - 1.2970
S2 - 1.2939
S3 - 1.2909
Nearest resistance levels:
R1 - 1.3000
R2 - 1.3031
R3 - 1.3060
Trading recommendations:
The GBP/USD currency pair continues to trade near the upper border of the side channel. Formally, now the upward trend is maintained, since not only the price is above the moving average line, but both channels of linear regression are directed upwards. However, the area of 1.2970-1.3010 remains unsettled, so further upward movement is still questionable. Formally, it is now relevant to buy the pair, but until the moment of unambiguous exit from the side channel, we recommend to trade on the increase very carefully or not to trade at all. It will be possible to sell the pair below the moving average line, but bears are unlikely to fall below it today.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression - the blue line of the unidirectional movement.
The lower channel of linear regression - the purple line of the unidirectional movement.
CCI - the blue line in the regression window of the indicator.
The moving average (20; smoothed) - the blue line on the price chart.
Support and resistance - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.