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By the end of the last trading week, the pound / dollar currency pair showed moderate volatility of 80 points where the quotation returned to the accumulation values again. From the point of view of technical analysis, we see that the quotation consolidated below the level of 1.2350 once again, actually returning us to the framework of the previous fluctuation of 1.2270 / 1.2350. Analyzing last Friday in detail, we see that the main movement came in the period 13:00 -17:00 [UTC+00 time at the trading terminal], where a remarkable oscillation was formed in the form of a V-shaped amplitude.
As discussed in the previous review, traders moved to short positions again, and someone else did not get off them. In fact, fixing the price below 1.2350 made it possible to move to zero for the waiters of the downward movement and locally go into short positions for speculators.
Considering the trading chart in general terms [the daily period], we see that a pullback was formed in the phase of the recovery move, which consists of versatile candlesticks of the "Doji" type. The remarkable form of the rollback [1.2206/1.2411] reflects the obvious uncertainty from both fronts, which, as an option, can result in an impulse jump. Let me remind you that the discussion goes around an elongated correction [1.1957/1.2580], where the recovery process began, but after that, it slowed down.
Friday's news background contained a report from the United States Department of Labor, where unemployment in September unexpectedly fell to a minimum of 50 years. Therefore, from the report we see that the data for August was revised, and the number of jobs increased by 168 thousand compared to 130 thousand earlier. Although current data came out with a decrease of 136 thousand, the focus was still primarily on the unemployment rate, which declined from 3.7% to 3.5%, on this background the dollar locally began to rise in price.
While there is a revision and discussion of a plan to resolve the Brexit issue, the information background continues to react violently to bursts of statements. Thus, French President Emmanuel Macron, in a telephone conversation with Prime Minister Boris Johnson, said he was agreeing on a position on Brexit by the end of the new week. In turn, on Sunday, Johnson reiterated his promise to withdraw the country from the EU, stating succinctly - "We will pack our bags and prepare for the exit by October 31." However, the Prime Minister's statements did not end there, and so, he outlined his position regarding a possible resignation, that even in the absence of an agreement with the EU, he did not intend to leave his post and only Elizabeth II could dismiss him. After which, with reference to the cabinet of ministers, information appeared that the Johnson government allegedly plans to disrupt the work of the EU, if Britain gives Brexit a respite. Among other things, British ministers are proposing to veto the future budget of the European bloc.
Today, in terms of the economic calendar, we do not have any statistics for Britain and the United States. Thus, all hope for a spontaneous information background.
Further development
Analyzing the current trading chart, we see that the new week began with the gap, but it closed almost immediately. Subsequent development was in a sluggish hesitation with an attempt to regain bearish interest. In this situation, there is only one important point, that the quotation manages to stay below 1.2350, which gives confidence to sellers.
In turn, speculators continue to analyze the descending positions that many traders already have. Chatter in relative zero in terms of profitability does not particularly scared traders, since the fundamental basis clearly signals a long-term downward trend.
It is likely to assume that the quote will still try to get closer to the coordinates of 1.2270, but whether it will be a breakthrough of the 1.2270 / 1.2350 range is still difficult to say, you need to monitor the behavior of the quote and fixation points. In any case, short positions in this case will smoothly go to the profit zone.
Based on the above information, we concretize trading recommendations:
- We consider buying positions in case of fixing a price higher than 1.2350, not a puncture, preferably with a yield higher than 1.2360. The prospect of running in the direction of 1.2400.
- Some traders already have positions for sale, and they are sent towards the subsequent level of 1.2210-1.2150. If we do not have selling positions, then it makes sense to wait until the price fixation is lower than 1.2270. With the prospect of a move to 1.2210-1.2150.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators on all the main time sections signal a decline, which to some extent reflects the current situation on the market. It is worth considering the moment that the oscillation is conducted relative to the given frames at the moment. Thereby, the indicators on the minute and intraday time frames can change.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 7 was built taking into account the time of publication of the article)
The volatility of the current time is 42 points, which is still a low value in terms of volatility. It is likely to assume that volatility may still increase, but whether we are able to overcome the daily average of [100 points] is still a question.
Key levels
Resistance zones: 1.2350 **; 1.2500 **; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support areas: 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** The article is built on the principle of conducting a transaction, with daily adjustment
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