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Slowing down - to put it mildly, we encountered a stop in terms of movement, extremely low volatility. Can this kind of stoppage play into the hands of traders? We will analyze this question in our article.
From the point of view of technical analysis, we see that after the impulse jump of Monday [November 11], the dynamics of the market began to decline. For two consecutive days there was a slowdown process, where the volatility was 58 and 40 points, which in terms of statistics and the nature of the pound / dollar currency pair is a deviation from the general dynamics. Thus, the theory that we began to develop yesterday in terms of dynamics and volatility still takes place for discussion. Let me remind you that it was said that working out at the level of 1.2770 might not have been working out that many people paid attention to. The volatility of 13 trading days shows a clear indecision [58 -> 65 -> 97 -> 62 -> 75 -> 45 -> 67 -> 58 -> 53 -> 83 -> 53 - -> 118-> 58 -> 40 points], and only the surge on November 11 [118 points] made a local change in the mood of the market. Therefore, that smooth descending course from the upper boundary of the flat [1.3000] to the lower [1.2770] was probably true, and the November 11 surge was local against the background of the information flow. The existing fluctuation confirms in some way the previously stated theory in the form of a characteristic deceleration [stop], where the number of long positions is not enough to fully direct us towards the upper frame of 1.3000. In turn, short positions, in contrast, are held and gradually displace long positions. In terms of the emotional component of the market, characteristic ambiguity has already been mentioned, and it is present not only in the existing narrow amplitude fluctuation, but also in the general movement of quotes within the boundaries of 1.2770 / 1.3000.
Analyzing the past hour, we see the set limits of 1.2815 / 1.2865, where a quotation develops at low volatility. There were no characteristic jumps or impulses in the movement of the quote. The hourly average candlestick had a volatility of about 13 points.
As discussed in the previous review, some traders on November 12 returned to short positions as soon as the quotation went into the range of 1.2840-1.2830. At present, the positions are held, being in the variable profit. The use of the soft method by money management enables traders to be in these positions without even unnecessary risk and even look closely at local - alternative - trading operations. The main trading volumes in terms of reduction are outlined after a clear breakdown of the range level of 1.2770 [1.2750 / ( 1.2770 ) / 1.2800].
Considering the trading chart in general terms [the daily period], we see a continuing fluctuation within the frames of 1.2770 / 1.3000, where upon closer examination you will see some bearish bars, which are worth a closer look at in terms of the theory of the further downward movement [bars are arranged by dates October 21 -> October 31 -> November 11]. Let me remind you that the global trend is directed downward: a period of 12 years is a downward trend; a period of 1.5 years is a downward trend.
On the other hand, the news background of the past day contained data on inflation in the United Kingdom, where expectations of its decline were confirmed, but the slowdown was more significant, from 1.7% to 1.5% with a forecast of 1.6%. After that, inflation indicators came out already in the United States, where expectations were quite diverse. Some were expecting inflation to remain at 1.7%, others, on the contrary, predicted a decrease to 1.6%, but in fact it turned out the opposite, inflation to 1.8%, which had a stupor effect on the market.
The reaction of the market to statistical indicators was amazing, and to be more precise, literally zero. If we look at the data in terms of logic, then the US dollar should have received significant support and started to grow, perhaps the stupor effect will decrease later and the market will still be able to win back the available indicators.
In addition, the informational background contained quite interesting comments. So, the head of the European Council, Donald Tusk, while speaking at a college in the city of Bruges, expressed his point of view that, after Britain nevertheless leaves the EU, they will become an outsider [second-rate player], while the main battlefield will be occupied China, the United States and the European Union.
"Only within the European Union can Britain play a global role. Only together we can confront the greatest powers of the world." said the head of the European Council.
Tusk also sincerely advised opponents of Boris Johnson not to abandon the idea of stopping Brexit and, in some sense, envied the ex-Speaker of the British Parliament, John Berkov, who honestly replied that he was thinking about the Brexit process.
"Brexit is the biggest foreign policy mistake in post-war stories. This is my frank thought." said John Bercow on November 6.
In turn, the ruling composition of Britain is now not up to Brexit, they would win the election. Here are two locomotives, Conservatives and Labor, periodically rolling out criticism of each other.
The head of the Conservatives in the person of Boris Johnson said that the plans of the Labor Party, which they will implement if they win the election, are a "shame", referring to the fact that, allegedly, in the event of the victory of Kobin, two referenda are possible.
Labor leader, Jeremy Corbyn, has denied the allegations and intentions to declare a referendum in Scotland if he wins the election.
Today, in terms of the economic calendar, we have data on retail sales in the UK, where they expect acceleration from 3.1% to 3.7%. In the afternoon, waiting for data on producer prices in the United States, which is projected to fall from 1.4% to 0.9%, but due to the latest inflation data in the United States, everything could be the other way around.
Further development
Analyzing the current trading chart, we see the same range of fluctuations of 1.2815 / 1.2865, where the quotation is so sluggishly active that it clearly gives a signal that just about - and everything will change. In fact, all this slowdown and sheer indecision are a reflection of a kind of distribution of trading forces, where after a stunning inertial jump on October 10–21, a failure in the market occurred. In terms of volatility, we have extremely weak values that should not scare you, but should prepare for the next rally.
Detailing the movement per minute, we do not see any leaps and there are no impulses in the market. Although there is a fluctuation in the given boundaries with a movement to the lower frame of 1.2815.
In turn, some traders continue to hold short positions with the prospect of a price return to the range of 1.2770 [1.2750 / ( 1.2770 ) / 1.2800].
Having a general picture of actions, it is possible to assume that the amplitude is a kind of variable platform, where, in the case of confirmation of the previously stated theory, we will expect the price to return back to the lower limit of 1.2770. In terms of alternative operations, one can look at long positions, but only in terms of local bursts, for a broader course there is not enough information yet.
Based on the above information, we derive trading recommendations:
- Buy positions are considered in the region of 1.2875 / 1.2885.
- Sales positions are already available and are being conducted towards 1.2800 / 1.2770. A deeper move will be considered after fixing the price lower than 1.2750.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators relative to all the main time intervals signal a further decline. It is worth considering that indicators in short-term areas may be under pressure from existing accumulation, giving out multi-directional interest.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(November 14 was built taking into account the time of publication of the article)
The volatility of the current time is 31 points, which is a small value for this time section. There is not so much left to wait, and so you need to be prepared that at any moment acceleration of volatility can occur since there are plenty of factors.
Key levels
Resistance Zones: 1.3000; 1.3170 **; 1.3300 **.
Support areas: 1.2770 **; 1.2700 *; 1.2620; 1.2580 *; 1.2500 **; 1.2350 **; 1.2205 (+/- 10p.) *; 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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