4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -97.9443
The British pound was trading lower on Thursday and Friday. However, although the downward trend remains in general, even on the 4-hour timeframe, it is clear that the movement of the last weeks is more like a "swing". The price regularly overcomes the moving average in both directions: for example, the local minimum of 1.3669 on Friday could not be overcome. In general, the entire downward movement of the pound in recent weeks looks like a banal technical correction after a long upward trend. The correction is as uncertain and weak as possible. There are a lot of factors that can start to influence the British currency at any time. Starting with the failed economic and geopolitical fundamental background from the UK, ending with "global factors", such as the pace of recovery of the US and British economies or the inflation of the money supply in the US. There is also a "speculative" factor. Therefore, it is now quite difficult to determine which of them affects the pound/dollar pair, and which do not. However, in any case, Britain does not stop there. As early as May 5, elections to the local parliament will be held in Scotland, and there is doubt that Nicola Sturgeon's party will strengthen its strength. And immediately after the victory of the Scottish National Party, an independence referendum will be initiated. The last decade has clearly shown us that referendums are not always held with the consent of the central government. Thus, Edinburgh can also come up with its own "workaround". Boris Johnson, after all, refused to give the right to a second referendum (the first was in 2014). However, this is not the main thing now. The main thing is that on the island of Ireland, it was not possible to solve the problem of Brexit and implement the Northern Ireland protocol so that it was accepted by the Northern Irishmen themselves. All those points and provisions that looked great on paper do not work very well. Riots broke out in Northern Ireland. It is believed that the official reason for the riots is the refusal of the Prosecutor's Office of Northern Ireland to punish politicians who participated in the funeral of the Irish Republican Army fighter Bobby Storey. However, many people express their dissatisfaction with the terms of Brexit, noting the deterioration in living standards after the UK left the European Union, and Ireland remained in it. Mass riots are accompanied by arson attacks on cars and police throwing Molotov cocktails. This development was feared in London even when Brexit was just being discussed with the EU. The fact is that on the island of Ireland, there were bloody battles with the British government on national grounds for 30 years, which were only extinguished in 1998. Many experts predicted the emergence of unrest if Northern Ireland and Ireland are on different sides of the border that has arisen on the island. The riots began, and it is quite difficult to say when and how they will end.
At the same time, the Irish authorities understand the seriousness of the problem and offer London to organize an emergency meeting to resolve the crisis on the island. Dublin believes that the strong tension between the various political forces in Northern Ireland is a serious problem that has escalated since Brexit and it requires immediate intervention. In Dublin, it is proposed to hold a meeting in Northern Ireland with the participation of top officials in the relevant political areas from Northern Ireland, Ireland, and England. However, London is in no hurry to hold such a meeting, as it believes that this may anger the Unionists, who may regard everything that is happening as an excessive interference of Ireland in the affairs of Northern Ireland. In general, serious problems continue to ripen in the Foggy Albion, which can reach their climax in the coming months. We can only observe the situation.
Of course, all these events, which have already occurred or will only happen, can hardly be called positive for the British currency. However, the main point continues to be that the market participants continue to pay no attention to the fundamental background from the UK. It looks like buyers just started to weaken their positions in recent weeks, which allowed the overbought pound to fall slightly below the sky. We have already said that if market participants took full account of the fundamental background from the Kingdom, the pound would already be "caught" around the 30th level. But there is no collapse, so from the current position, the pound can move in any direction, and any movement can be explained easily and simply. There are a lot of factors that can now influence the pound and the dollar. Thus, the pound remains at this time a "dark horse", whose future is extremely difficult to predict.
The average volatility of the GBP/USD pair is currently 96 points per day. For the pound/dollar pair, this value is "average". On Monday, April 12, therefore, we expect movement within the channel, limited by the levels of 1.3607 and 1.3799. The reversal of the Heiken Ashi indicator back to the top can signal a new round of upward movement.
Nearest support levels:
S1 – 1.3702
S2 – 1.3672
S3 – 1.3641
Nearest resistance levels:
R1 – 1.3733
R2 – 1.3763
R3 – 1.3794
Trading recommendations:
The GBP/USD pair started a downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in the sell orders with the targets of 1.3672 and 1.3611 until the Heiken Ashi indicator turns up. Buy orders should be opened in case of overcoming the moving average with the targets of 1.3824 and 1.3855 and keep them open until the Heiken Ashi indicator turns down.