FX.co ★ Overview of the GBP/USD pair on September 29

The GBP/USD currency pair reminded of itself again on Wednesday. Recall that on Monday, the pound sterling showed volatility equal to 600 points, which happens once every five years. Such volatility speaks of nothing else but panic in the market. The euro currency at this time also notably "flew" from side to side, but its volatility value can still be called "very high." And so, after a relatively calm Tuesday with a volatility of "only" 200 points, the British currency crashed again with terrible force on Wednesday. By the American trading session, the pair had fallen 300 points from the day's highs. In the afternoon, an equally strong growth followed, which did not change anything. Thus, we have a continuing downward trend and a continuing collapse of the British pound, which is confidently moving towards its price parity with the dollar. A few months ago, this option seemed fantastic, and now the pair is again striving for its absolute lows and may continue to fall even below the 1.0000 mark. Thus, we are present at a historical event. However, now many events can be called historical.

Against the background of everything happening worldwide, I don't even want to think about central banks, their monetary policies, some political crises, and vicissitudes. As we have already said in the article on the euro/dollar, the main place in traders' minds is occupied by the topic of geopolitics. Does anyone think that a small reduction in tax rates in the UK could provoke such a fall in the pound? Yes, after Brexit, the drop was less! The same applies to the "classical foundation" expressed by the central bank's actions. The Bank of England has raised the rate twice in a row, and what? The pound has been setting anti-records of value against the dollar and continues to set them. COT reports have even begun to indicate an increase in "bullish" pressure, and what's the point if the pound continues to fly down?

Nord Stream-1 has been blown up. Who is to blame?

Yesterday, we discussed a possible vote of no confidence in Liz Truss. We do not believe that it will be announced, and we do not believe that the pound is falling because of this event. Today we will talk about the Nord Stream-1 gas pipeline explosions that happened on Tuesday. The essence of this topic is simple. The pipeline was damaged in three places simultaneously, leading to a drop in pressure and an actual stop of gas pumping to Europe. Experts have already stated that the pipe itself, through which the gas is pumping, extremely rarely gives holes, and having it in three places at once is nonsense. Experts worldwide immediately put forward a theory about sabotage, but the question is, who is behind this sabotage? And that's where the fun begins.

Representatives of the US special services have already stated that the Kremlin may be behind these explosions, thus continuing to conduct "gas blackmail" on the European Union. From a technical point of view, blowing up two pipes at a depth of 70 meters is not difficult. You only need a small vessel, a few divers, and explosives. Therefore, theoretically, anyone could have done it. Furthermore, it's more interesting. Immediately after the news about the pipeline damage broke, former Polish Foreign Minister Radek Sikorski tweeted, "Thank you, USA," attaching a photo of the accident. The press secretary of the Russian Foreign Ministry, Maria Zakharova, also reacted by asking Sikorski whether his message should be regarded as official recognition of the terrorist attack. The European Union has so far refrained from official comments, but they also look at askance in the direction of Russia. We don't even want to make assumptions about who might be behind this terrorist attack and who might benefit from it. To completely stop gas flows to the European Union? Why not just simulate a breakdown and say that pumping gas is impossible and repairing the pipeline is also impossible because of sanctions? Do the states fuel the conflict between the EU and the Russian Federation? Why, then, does Sikorski almost openly thank them? Shouldn't it be kept secret? Can the Nordic countries, independent of Russian gas, redirect their "blue fuel" flows to the EU through a new pipeline opened recently? A paradox, an absurdity.

The average volatility of the GBP/USD pair over the last five trading days is 329 points. This value is "very high." On Thursday, September 29, thus, we expect movement inside the channel, limited by the levels of 1.0435 and 1.1094. The reversal of the Heiken Ashi indicator downwards signals a new round of downward movement.

Nearest support levels:

S1 – 1.0742

S2 – 1.0498

S3 – 1.0254

Nearest resistance levels:

R1 – 1.0986

R2 – 1.1230

R3 – 1.1475

Trading Recommendations:

The GBP/USD pair is still being adjusted on the 4-hour timeframe. Therefore, at the moment, new sell orders with targets of 1.0498 and 1.0435 should be considered if the Heiken Ashi indicator turns down. Buy orders should be opened when fixed above the moving average with targets of 1.1094 and 1.1230.

Explanations of the illustrations:

Linear regression channels – help determine the current trend. The trend is strong if both are directed in the same direction.

The moving average line (settings 20.0, smoothed) identifies the short-term trend and the direction in which trading should be conducted now.

Murray levels are target levels for movements and corrections.

Based on current volatility indicators, volatility levels (red lines) are the likely price channel in which the pair will spend the next day.

The 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.