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4 hour timeframe
The amplitude of the last 5 days (high-low): 60p - 67p - 125p - 75p - 134p.
Average amplitude for the last 5 days: 92p (80p).
The British pound sterling, although it strengthened last week quite strongly, on Friday, July 19, began to correct itself and fell to the Kijun-sen line. The previous local maximum failed to overcome or reach by the pair of pound / dollar. Thus, according to the technical analysis, everything goes to the fact that the downward trend will resume. Next week, the whole world will know who will become the new leader of the Conservative Party and British Prime Minister, which is either Jeremy Hunt or Boris Johnson. According to the results of exit polls, Johnson leads, however, the balance of power between candidates may change after the events of last week, when the British Parliament passed an amendment to the Irish Parliament Act, which does not allow a country to leave the EU without a "deal" without the approval of Parliament itself. Thus, Johnson may unexpectedly lose the election, since he regularly insisted that the country should in any case leave the EU on October 31, even if there were no agreements with Brussels. It was he who was ready to suspend the work of Parliament in order to implement the "tough" Brexit on its own. Now, it turns out that this option is unlikely. A softer and loyal Jeremy Hunt, who allows Brexit to postpone to a later date, which does not persist with the date of October 31, which is ready for dialogue, may suddenly receive the support of the majority of members of the Conservative Party. At least from our point of view, this option cannot be ruled out. Anyway, on July 23, we will find out the name of the new prime minister. The fate of the pound sterling for the coming weeks, at least, will depend on it. Since at the moment, the British currency is inclined to decline again. Bears continue to dominate the market, and there are no good reasons to buy the pound.
Trading recommendations:
The currency pair pound / dollar began a downward correction. Formally, long positions with targets at levels 1.2591 and 1.2621 remain relevant, after the end of the current round of correction. However, longs are now associated with increased risks.
We can buy the US dollar after the pair make a reversal below the line Kijun-sen, which will lead to a change in the downward trend. The first goal is 1.2407.
In addition to the technical picture, we should also take into account the fundamental data and the time of their release.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen - the red line.
Kijun-sen - the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dotted line.
Chinkou Span - green line.
Bollinger Bands indicator:
3 yellow lines.
MACD Indicator:
Red line and histogram with white bars in the indicator window.
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