The GBP/USD currency pair managed to grow by 100 points on Tuesday and then collapsed by 100 points. Many expected that the fall in quotes would continue on Wednesday, as the pound sterling did not want to follow the example of the European currency, which showed only growth on Tuesday. However, yesterday, the pound sterling began to grow again and failed to gain a foothold below the Murray level of "6/8" - 1.3062, from which it bounced twice in total. The growth of the British currency on Wednesday was even stronger than on Tuesday. Thus, it is quite difficult to explain what is happening now in the foreign exchange market. It should be noted right away that there were no important macroeconomic or fundamental events in the UK or the States either on Monday or Tuesday. On Wednesday, reports on GDP for the fourth quarter were published in America, as well as from ADP on changes in the number of employees in the private sector. That's just the movements shown by the pair from Monday to Wednesday had nothing to do with this statistic. Even only those movements that the pair showed on Wednesday. Because at the time of the publication of American statistics, the pair has already gone up more than 100 points.
Thus, we conclude that the market hardly understands how to react to the news from Turkey about a possible truce between Ukraine and Russia. On the one hand, a certain signal was given to the markets. On the other hand, no peace agreements have been signed and both sides report that there is still long and painstaking work to be done before the presidents of both countries meet to sign all the papers. Also, both delegations note that there are several cornerstone issues in which there is still no progress. Therefore, the market, on the one hand, reacts to positive messages from Turkey, and on the other hand, understands that there is nothing to be happy about yet. Perhaps it is because of this that we are observing the "swing". Moreover, there are quite volatile "swings". However, we can observe them on the hourly TF, because at a 4hour timeframe, these movements are not so strong as to talk about a flat.
Boris Johnson believes that sanctions against Russia should not be lifted in any case.
At the same time, British Prime Minister Boris Johnson again spoke in public and again noted "anti-Russian rhetoric." This time, Johnson said that he had a conversation with the leaders of the United States, France, Germany, and Italy, in which they agreed not to reduce pressure on the Kremlin. Even with the withdrawal of troops from Kyiv and Chernihiv. According to Johnson, sanctions pressure should be maintained at least until "all this horror in Ukraine stops." Boris Johnson also expressed skepticism about Moscow's statement about withdrawal of some troops from the northern front. According to Johnson, there is no withdrawal of troops at this time, as British intelligence informed him. His American counterpart Joe Biden echoes him, who also said that it is not visible from satellites that Moscow is withdrawing troops, and their movement is not called "withdrawal", but "redeployment".
In Kyiv, they believe that Moscow's statements do not correspond to the truth and are not going to weaken defense efforts. In general, so far there are a lot of words, but there are few real facts and evidence of the easing of tension in the military conflict. It seems that the negotiating groups can agree on anything, but they have no relation or influence on what is happening in Ukraine. It would be reasonable to expect that if Moscow and Kyiv are moving towards signing a peace agreement, they should at least stop firing for a while. However, we do not observe anything like this, so we maintain our opinion that these negotiations can only be a "screen". The British pound and the euro, which have experienced optimism about the possible end of the military conflict in the near future, may also rush back down as soon as the conflict begins to escalate again.
The average volatility of the GBP/USD pair is currently 90 points per day. For the pound/dollar pair, this value is "average". On Thursday, March 31, thus, we expect movement inside the channel, limited by the levels of 1.3054 and 1.3234. The reversal of the Heiken Ashi indicator downwards signals a possible resumption of the downward movement, since there was no confidence in overcoming the moving.
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 has started a new round of upward movement in the 4-hour timeframe. Thus, at this time, new sell orders with targets of 1.3062 and 1.3000 should be considered if the pair bounces off the moving again. It will be possible to consider long positions no earlier than fixing the price above the moving average line with targets of 1.3234 and 1.3245.
Explanations of the illustrations:
Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.