For almost a month, the European Union has been trying to adopt the sixth package of sanctions against Russia. The main stumbling block was the issue of the embargo on Russian energy supplies. And so, yesterday, almost at night, that is, when all the main stock exchanges were closed, the European Commission finally announced its decision on sanctions. Brussels imposed a partial embargo on Russian oil supplies. It is partial only because supplies via the pipeline have been lifted from the ban. According to European Commission President Ursula von der Leyen, almost two-thirds of Russian oil exports to Europe were banned. At the same time, Germany and Poland announced a complete rejection of Russian oil by the end of this year, so that oil exports from Russia to Europe should be reduced by 90%.
So far, there are no answers to two fundamentally important questions. First, there is no specific time frame for the entry into force of the ban. According to unofficial data, the embargo will come into force within six months, that is, towards the end of this year. Secondly, with what will Europe replace the dropping volumes of energy carriers. And the second question is the main one.
The European Commission, of course, announced plans to increase funding for renewable energy sources. But not only in six months, but also in several years, it is physically impossible to replace oil with renewable energy sources. Moreover, on average, only a third of oil goes to energy production in one form or another. Most of it goes to the petrochemical industry. Even the food industry uses refined products. And Europe has not been able to agree on an increase in supplies from other countries. In other words, this decision threatens the existence of entire sectors of the European economy.
The only thing that saved the euro from an imminent collapse was the time of the announcement of the decision on sanctions. But the market will inevitably win back this news for a long time. Moreover, it is the news about the volume of deliveries from other countries that will be decisive. After all, Europe will run around the world and try to negotiate new supplies. There is basically no other way out. But over the past three months, all such attempts have been unsuccessful. And it is quite obvious that the single currency will pull the pound along with it. In principle, like all other currencies included in the dollar index.
The GBPUSD currency pair formed a stagnation just below the 1.2670/1.2720 resistance area. This signals a slowdown in the upward cycle, where the volume of long positions has decreased.
The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which indicates a high interest of traders in the upward cycle. RSI D1 settled above the 50 line. This is a signal for an elongated correction.
Alligator H4 is signaling an upward trend, MA moving lines are directed upwards. The Alligator D1 indicator confirms the formation of an elongated correction by changing the direction of the MA sliding lines.
Expectations and prospects:
In this situation, special attention is paid to the stage of stagnation within the amplitude of 1.2600/1.2700. This fluctuation may indicate the process of accumulation of trade forces, which will eventually lead to a local acceleration. Based on the assumption, the method of breaking through one or another stagnation border is considered the optimal trading tactic.
Complex indicator analysis has a variable signal in the short-term and intraday periods due to stagnation. Indicators in the medium term signal a long position due to the stage of an elongated correction.