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: 61.8345
The British pound on the first trading day of the week could not update the highs of the past week. That is, by and large, the strengthening of the British currency stopped yesterday. However, this does not mean that the upward trend is complete. Given the huge number of important fundamental events this week, most likely, traders just lay low and are waiting for the start of the data. The upward trend of the pound/dollar pair is fully maintained, although it is now based on the same belief of market participants in the victory of Boris Johnson's party in the elections and the subsequent implementation of Brexit until January 31. Thus, one can even assume that the pair will ignore all macroeconomic data this week and will wait only for the elections and their results. Whether this is true or not, we can find out today.
In the UK, GDP in monthly terms for October is scheduled for today, as well as industrial production for the same period. Perhaps it is not necessary to remind anyone that the macroeconomic reports from Britain over the past two months leave much to be desired and cannot cause anything but a sell-off of the British currency. This time, GDP is expected to grow by 0.1% m/m, and industrial production will add 0.2% every month but will lose 1.2% on an annual basis. Thus, today it will become clear whether traders will work out macroeconomic information or you can safely wait for Thursday and Friday when the elections will be held and their results will be summed up.
Meanwhile, in the UK, various results of opinion polls and social surveys continue to come out in batches. Studies that show a possible balance of power between the Conservatives and Labor in the election. The data vary with impressive values. The conservatives are in the lead anyway, but Labor is lagging behind them by 6% to 14%. There is, of course, hope for research by YouGov, which uses a unique forecasting technique that allowed it to predict the results of past parliamentary elections with a high degree of accuracy. The results of the study will be released today and will be, so to speak, the last forecast before the election. However, even in the case of YouGov, things can be quite ambiguous. For example, the company predicts that the conservatives will gain 325 votes, and in practice 315 will come out. The margin of error is small, but in the first case, it will be a majority of conservatives in parliament, and in the second - no.
It seems that traders also understand that the chances of the Conservative Party are great, but this does not guarantee them victory. The pound has been growing in the last two months, but if the conservatives are defeated, the fall of the pound/dollar pair may begin with no less pace. Boris Johnson himself said: "The choice on Thursday is incredibly harsh. It is a choice between moving forward with a conservative government that will implement Britain's exit from the EU or spending the whole of next year in a complete paralysis because of two referendums. One is in Scotland, the other is on the EU, when Jeremy Corbyn will not even be able to voice his position on Brexit to us, and who is going to campaign in support of the agreement that he is proposing."
We believe that in Thursday's election, it will all come down to a simple choice: the pros and cons of Brexit. Thus, the conservatives will gain exactly as many votes as the inhabitants of the UK currently supports a "divorce" from the European Union. Given the fact that in 2016, there were only 52% of them, now there may even be fewer of them.
From a technical point of view, the GBP/USD currency pair will maintain an upward trend, and the upward movement can resume at any time. All trend indicators are directed upwards, so there are no signs of a correction at the moment.
The average volatility of the pound/dollar pair for the last 5 days has not changed and is 81 points, for the last 30 days -70 points. Based on these indicators, the maximum possible level for today is 1.3216, if the pair continues to move up all day. Based on the same indicators of volatility, we can conclude that the sale of the British currency today will not become relevant since the price is unlikely to be able to consolidate below the moving average line today.
Nearest support levels:
S1 - 1.3123
S2 - 1.3062
S3 - 1.3000
Nearest resistance levels:
R1 - 1.3184
R2 - 1.3245
R3 - 1.3306
Trading recommendations:
The GBP/USD currency pair continues its upward trend. Thus, in these conditions, it is recommended to continue to buy the pound until the reversal of the Heiken Ashi indicator down from the targets of 1.3184 and 1.3216. It is not recommended to return to sales today, as the price is too far from the moving average line. All macroeconomic statistics are still ignored by traders, political and technical factors are in the foreground.
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.