06.12.201909:26 Forex Analysis & Reviews: Overview of the GBP/USD pair on December 6. Donald Tusk: Brexit is one of the most serious mistakes in the history of the EU

4-hour timeframe

Technical data:

The upper channel of linear regression: direction - up.

The lower channel of linear regression: direction - up.

The moving average (20; smoothed) - up.

CCI: 104.8293

This has not happened for a long time, when for the EUR/USD and GBP/USD pairs, absolutely all trend indicators are directed upward. Both linear regression channels, the moving average, the Heiken Ashi indicator - all indicate an upward trend. But is it always possible to benefit and profit from this? For example, both channels of linear regression were directed upwards during the month when the pair traded exclusively in the 200-point side channel when there was no trend as such. In the vast majority of cases, not only in the last 2 months but also in the last 3 years, the pound grew exclusively on rumors of an early "divorce" of the UK and the EU as part of the Brexit process. Now, the pound is growing, and no one can explain why it is growing. More precisely, there can only be one explanation: it is simply bought by traders expecting the conservatives to win the election on December 12, allowing Boris Johnson to complete Brexit until January 31, 2020. Perhaps before that, the pound was too oversold and now we see some rebalancing. One way or another, but the upward movement of the British currency continues, and the downward movement of all UK statistics continues. Thus, macroeconomic data and the direction of movement of the GBP/USD pair now do not coincide at all.

Meanwhile, former European Council President Donald Tusk said that Brexit is the main mistake of the European Union and the UK in their history. According to Tusk, the UK will now become a "second-class country" that will not be able to assert itself fully on the international stage. "I have repeatedly heard from Brexit supporters that leaving the EU will again make the UK a global force, they believe that only alone can it be great but the reality is exactly the opposite," Tusk said. Also, the former head of the European Council said that it is a pure illusion to believe that it will be possible to establish good relations with the UK when it is outside the EU. We also believe that Brexit, whatever it is, will harm the UK economy. Deterioration should be expected necessarily, thus, if Boris Johnson still manages to implement Brexit, then after that, the pound may be again inclined to fall, as macroeconomic indicators will continue to deteriorate. Moreover, it will take years to conclude trade agreements with the European Union, America, and other trading partners to trade effectively. Based on all of the above, in the long term, we are still waiting for the fall of the British currency. By the way, it is impossible not to recall once again the two members of the Bank of England monetary committee who voted in favor of the rate cut at the last meeting. I wonder if the rate were lowered right now, would the pound fall in price or continue to rise as if nothing had happened? However, this is a lyric. In reality, the Bank of England can go to the easing of monetary policy at the next meeting, which is a bearish factor for the pound/dollar pair. And of course, trade wars, which will affect both the UK economy and the US economy. The only question is whose economy will suffer the most. If suddenly it will be the American economy (which is unlikely), the pound will have a chance for a long-term upward trend paired with the dollar. Otherwise, it will not appear.

However, although the fundamental component says that the only growth factor for the British pound now is the parliamentary elections, we recommend paying attention to technical factors, which, as we have already said, clearly indicate an upward trend. Thus, as long as it persists, it is recommended to trade on the increase.

The average volatility of the pound/dollar pair in the last 5 days decreased to 81 points, in the last 30 days - to 71 points. Thus, volatility decreases again. Based on the average volatility of the pound/ dollar pair, the maximum possible level for today is 1.3234, if the pair continuously moves up all day. Based on the same indicators of volatility, we can conclude that the sale of the British currency today will not be relevant, as the price is unlikely to be able to consolidate today below the moving average line. In the US trading session, volatility may increase due to a large number of important macroeconomic publications.

Nearest support levels:

S1 - 1.3123

S2 - 1.3062

S3 - 1.3000

Nearest resistance levels:

R1 - 1.3184

R2 - 1.3245

R3 - 1.3306

Trading recommendations:

The GBP/USD currency pair continues its upward trend. Thus, in these conditions, it is recommended to continue to buy the pound until the reversal of the Heiken Ashi indicator down to 1.3234. It is not recommended to return to sales today, as the price is too far from the moving average line. All macroeconomic statistics are still ignored by traders, political and technical factors are in the foreground.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of the illustrations:

The upper channel of linear regression - the blue line of the unidirectional movement.

The lower channel of linear regression - the purple line of the unidirectional movement.

CCI - the blue line in the regression window of the indicator.

The moving average (20; smoothed) - the blue line on the price chart.

Support and resistance - the red horizontal lines.

Heiken Ashi - an indicator that colors bars in blue or purple.

Possible variants of the price movement:

Red and green arrows.