From the point of view of complex analysis, we see high activity, where the quote locally broke through the psychological level of 1.3000, and now let's talk about the details. The quote is very active for the fourth day in a row, where we saw a sharp surge in buyers at first who managed to throw the quote up to the level of 1.3207, after which we collapsed twice faster, returning the price to the psychological level of 1.3000. The reason for this spectacle was the desire to break the level of [1,3000], where the quote locally with shadows of candles reached the value of 1.2940. As we can see from the result, even such high activity failed to break through the control values of the psychological level, where the price was not fixed below the level of 1.2960, relative to the H4 time period.
What do we have?
We have here an inverted V-shaped model, where the base is still the psychological level of 1.3000, which can not be broken by price. In fact, if we would see a solid pass of the control value, then the chance of recovery relative to the medium-term upward trend would increase by several times.
In terms of volatility, we see a real holiday for speculators. There were no such stable jumps in activity for a long time, where the quote overcame the daily average on a daily basis. So, following from the analytical report of Bloomberg, pound sterling sets new records in terms of daily turnover, relative to TOP-pairs for the dollar. In view of the assumptions, the rise in volumes is inclined to a number of facts: activity of noise from Brexit, as well as a decrease in the market share of the Chinese yuan.
Details of volatility: Thursday - 131 points; Friday - 125 points; Monday - 215 points; Tuesday - 105 points. The average daily indicator relative to the whole analysis is 92 points, [see the table of volatility at the end of the article].
By detailing the day by minute, we see that jumps in activity were recorded at the start of the European trading session, where we saw a sharp decline beyond the psychological level of 1.3000 at first, and then a similar jump in volume, fixing itself above the level of 1.3000 .
Details: UP - 05:30-6:45; DOWN - 7:30-8:45 [UTC+00 time on the trading terminal].
As discussed in the previous review, speculators are happy, because impulse leaps give them the opportunity locally, and most importantly, make them earn profit. At the same time, the main traders were at a low start in terms of short positions, but price fixing below the control value of 1.2960 did not happen.
Considering the trading chart in general terms [the daily period], we see a solid level of 1.3000, which has focused on itself in recent months. In fact, now it is an obstacle in terms of a possible recovery process with respect to the medium-term course.
The news background of the past day had an index of business activity in the UK construction sector, where they recorded an increase from 44.4 to 48.6 with a forecast of 46.6.
The reaction of the market was to restore positions on the pound, where a reverse gulf occurred during the local oversold even before the release of statistical data, and positive data for Britain supported this process.
In terms of the general informational background, we see the fear of a hard Brexit in the upcoming negotiations on the relationship agreement after. Thus, the recent verbal clash between Boris Johnson and Michel Barnier regarding standards scared investors, as each side adheres to its position and the EU definitely will not compromise, thus Britain just needs to agree.
In turn, the head of the European Commission (EC) Ursula von der Leyen slightly relaxed the situation during the meeting with the British staff of the EC, saying that we are aimed at very close cooperation with Britain and no surprises are expected.
"As you know, the European Commission will propose to the EU Council draft negotiation guidelines for our future partnership with the United Kingdom. If we look at these topics, one thing is certain: we know that we are focused on very close cooperation with the United Kingdom. There will be no surprises" stated by the head of the European Commission.
Today, in terms of the economic calendar, we have the final PMI data for Britain, where the composite index rises from 49.3 to 52.4, and the business activity index in the services sector rises from 50.0 to 52.9. In the afternoon, we are waiting for the ADP report on the level of employment in the private sector of the United States, where they forecast a decrease compared to the period earlier, [202 thousand ---> 156 thousand]
Further development
Analyzing the current trading chart, we see a strong concentration of prices in the area of the psychological level of 1.3000, where the activity declined many times, as if the quote was preparing for a jump again. Probably, we see another pressure on the participants in the process, where there is an accumulation of trading volumes. In connection with the growing background, the tactics of speculative positions are still relevant, as well as the readiness for the main participants to appear on the market in case of drastic changes in terms of price fixing points.
From the point of view of the emotional mood of market participants, we see a high coefficient of speculative operations with an increase in trading volumes, which may project an increase in volatility again. Thus, FOMO syndrome is still on the market [FOMO - Lost Benefit Syndrome].
By detailing the per minute portion of time, we see a local downward course in the structure of the psychological level of 1.3000. Thus, the quote still conditionally stands still.
In turn, speculators continue to monitor market leaps, as the tactics of local operations are now profitable. In turn, the main traders monitor the value of 1.2960 for clear fixations.
Having a general picture of actions, it is possible to assume a temporary price fluctuation within 1.2960 / 1.3055, with respect to which actions are performed. Trading tactics are divided into two subspecies: some work on price fixing points 1.2960 / 1.3055, H4; Others expect the slightest acceleration, where they enter the market with conservative volume and also quickly exit the market.
Based on the above information, we derive trading recommendations:
- Buy positions are considered in case of price fixing higher than 1.3055.
- Sell positions are considered in case of price fixing lower than 1.2960, not a puncture in the shadow of a candle.
The recommendations relate in terms of the main movements, not speculative.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that due to the restrained downward interest caused by recent impulses, indicators of technical instruments unanimously signal sales.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(February 5 was built taking into account the time of publication of the article)
The current time volatility is 28 points, which is an extremely low indicator for market dynamics relative to the days earlier in this period of time. It is likely to assume that there will be acceleration even in the event of a rebound from the psychological level, that is, the news background.
Key levels
Resistance zones: 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1,3000; 1.2885 *; 1.2770 **; 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
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment