The GBP/USD currency pair is showing low dynamics, following within the boundaries of the sideways channel 1.3000/1.3185, while the sequence of the price rebound from the set frames has a natural basis in the market.
The deceleration in the structure of the flute is variable, which in theory can give acceleration in the event of a breakdown of a particular channel boundary. The primary difference between the existing flat and the typical one is in the daily period, where there is a set of versatile doji candlesticks, which signals a high degree of uncertainty in the market instead of consecutive fluctuations. Perhaps the ambiguity is related to the sell-off of the US dollar, due to which the pound exchange rate managed to strengthen strongly in value. Under current economic circumstances, this is an irrational step, which may later lead to a sharp weakening of the pound.
It turns out that the pound is overbought and trying to adjust in value, and the dollar still can not get off the needle of sales, so there is a versatile flat of candle models like "Doji".
Analyzing the last trading day by the minute, a narrow horizontal price movement of 1.3086/1.3120 can be seen, where the only interesting moment was the burst of activity of short positions in the period of 10:30 (UTC+00 trading terminal time). The surge came amid speculation within the market stagnation.
In terms of daily dynamics, the lowest volatility indicator for 60 trading days is recorded, it amounted to 47 points, which is 56% lower than the daily average. If we proceed from the fact that the activity is below the average level over the last week, and an unusual low value of volatility has formed over the past day, then we can assume that the compression of dynamics in the very near future will lead to a sharp surge in speculative activity, which will provoke an increase in volatility.
As discussed in previous reviews, the main tactic is the method of breaking through the established flat boundaries, which will make it possible to catch a surge in activity, as well as receive a signal about the upcoming price movement.
The news background of the past day did not include the publication of key economic indicators for Britain and the United States, the market followed a technical scenario. Secondary indicators include the IHS Markit household Finance index, which fell to 40.8 in August from 41.5 in July, which is considered the largest drop since 2011.
Today, in terms of the economic calendar, we have data on the construction sector in the United States, where indicators for the number of building permits issued, as well as new construction projects, may grow. In terms of fundamental analysis, the growth in construction indicators plays in favor of the strengthening of the US dollar. It is worth recalling that the recent reaction of fundamental analysis to statistics for the United States has been negatively correlated.
Further development
Analyzing the current trading chart, you can see a sharp surge in activity relative to the stagnation of the past day, where the quote headed towards the upper border of the flat formation 1.3000/1.3185.
It can be assumed that the area of 1.3170/1.3185 will play the role of resistance in the event of a repetition of the regular basis of price fluctuations within the flat, which will lead to a reverse movement of 1.3100-1.3000.
The method of breaking through the boundaries of the 1.3000/1.3185 flat, which will indicate the subsequent path of the quotes' development is the main strategy that most traders adhere.
- Consider buy deals above 1.3185, towards 1.3250.
- Consider sell deals below 1.2985, towards 1.2885-1.2770.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on minute and hourly intervals work amid an upward jump from the lower border of the flat to the upper one, signaling a buy. The daily period, on the other hand, always signals a buy based on the main course, excluding the current slowdown.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(18 August was built taking into account the time of publication of the article)
The volatility of the current time is 74 points, which is 57% higher than the previous day's indicator, which signals a local acceleration. It can be assumed that speculative interest will continue in the market for some time. The main surge in activity will occur on the breakout of the established flat.
Key levels
Resistance zones: 1.3200 (1.3250) **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support zones: 1.3000; 1.2885 *; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.
* Periodic level
** Range level
*** Psychological level