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: -16.7648
The British pound in the second trading day of the week updated its local highs but failed to continue the upward movement. Thus, the upward trend of the GBP/USD pair remains, and the date of elections to the UK parliament is approaching. Perhaps, even in the run-up to the vote, the British pound will roll back a little down, since in reality no one still knows how the final vote count will end and how many seats the conservatives will gain in parliament. Accordingly, it is possible that the Conservative Party will not be able to form a "majority government", and this event can be safely recorded in the list of defeats of Boris Johnson, which already has 6 or 7 points. In this case, it will be possible to put an end to Brexit, at least until the end of January 2020, it is unlikely to be implemented. Thus, tomorrow and the day after tomorrow, the pound/dollar pair can be very stormy, a strong pullback down is possible. You need to be ready for any surprises and do not forget about the stop-loss levels.
As for any macroeconomic statistics, the Fed meeting, Jerome Powell's speech - theoretically all these events can have an impact on the movements of the GBP/USD pair today. However, we have repeatedly drawn the attention of traders that the pound in the last two months is moving solely on the positive expectations of traders regarding the election results and Brexit. It is the expectations of traders and their belief in the best that pushes the pound up from time to time in the last three years. However, almost every time after the rise of the British currency, a collapse of quotes inevitably followed. But that's another story. Thus, we believe that traders may well ignore today's US inflation report and the Fed meeting. By the way, the reaction of traders to this or that event is visible now from the correlation of the EUR/USD and GBP/USD pairs. There is no correlation.
At the same time, more experts are considering alternative options for the balance of power in the new parliament and further developments related to it. According to the absolute majority of experts and political analysts, if the conservatives fail to form a "majority government", then Brexit will not be implemented until January 31, 2020, Labor will create coalitions with other parties (including enough opponents of Brexit), in every possible way to prevent Boris Johnson from implementing Brexit. Also, a second referendum is almost inevitable, even if the Labor Party does not win the election. After all, if the Conservatives do not get more than half of the vote (at least in conjunction with their allies, who also adhere to the desire to leave the EU as soon as possible), the crisis of the government will remain the same as it has been in recent years. A government crisis is a situation in which the current parliament and the Prime Minister cannot agree on key decisions on Brexit. That is, Brexit remains in limbo and by a majority of parliamentary votes, it is impossible to decide either on its abolition, or on a second referendum, or its completion. As we can see, if the Conservative Party does not gain the necessary number of seats, the crisis will remain in the same form as it was before. Accordingly, the only option to solve the problem will be a second referendum, whether Boris Johnson wants it or not. Fortunately or unfortunately, Boris Johnson cannot hold parliamentary re-elections indefinitely until he reaches the required deputies.
The technical picture of the pair indicates the continuation of the upward trend, but, as we have already said, in the coming days (tomorrow and the day after tomorrow), the pair may be subject to movements with increased volatility and frequent reversals. Plus, traders are likely to ignore all the events in America, so it is impossible to predict the movement of the pound/dollar pair in the coming days.
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 1.3232, if the pair continuously moves up all day. However, as we have already said, until the end of the week, the pound can be traded with increased volatility, so this value can be easily passed, as well as the lower limit of the channel of 1.3070.
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 pair began to adjust within the upward trend. Thus, in these conditions, it is recommended to resume buying the pound after the reversal of the Heiken Ashi indicator upwards with the targets of 1.3184 and 1.3232. It is recommended to return to sales not earlier than the crossing of the moving average line with the targets of 1.3062 and 1.3000 by traders. 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 lines 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.