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At the end of the last trading week, the pound/dollar currency pair showed low volatility of 63 points, resulting in a sluggish amplitude fluctuation. From technical analysis, we see that the week was intense and hot, which is only the movement itself, more than 360 points of vertical growth. So where did the quotation go – to the range level of 1.2350, where it formed the primary slowdown and, as a fact, a gradual recovery process. From logic and technical analysis, the level of 1.2350 is an excellent point of resistance, but in terms of FOMO and panic of the information flow, you cannot be 100% sure that the upward move is completed.
As discussed in the previous review, traders took a wait-and-see position, analyzing the possibility of breaking into a downward move in terms of restoring quotes. In some ways, they managed to enter the market, but Friday's volatility was low and the expected coordinates were not achieved. Considering the trading chart in general terms (daily period), we see that the quote has returned to the peak level of the previous correction, which is not bad, but not good either. As I have repeatedly mentioned, this kind of return of quotes beyond the previous correction is not a good signal in terms of a healthy trend. Whether the slowing trend, as it was in late 2016 and early 2017, is still unknown, traders are still guilty of a strong informational noise, which unjustifiably lifted the quote.
Friday's news background contained a report from the United States Department of Labor, which expected a reduction in the number of people employed in the non-agricultural sector, and it was received from 159K to 130K. At the same time, the unemployment rate was confirmed at 3.7%, but the average hourly wage rose to 0.4%. Did the news have pressure on the US dollar? No way.
The information background continues to revolve around the divorce proceedings, where on Friday it became known that the House of Lords approved the bill banning hard Brexit, that is, the bill on the postponement will already hit the table of Queen Elizabeth II for further signing. In turn, Boris Johnson is not discouraged and tries to prepare a plan according to which any further delay in the country's exit from the EU will be legally impossible. There are no details of Barbaross's plan yet. From the European side, the first criticism from the French Foreign Minister, Jean-Yves Le Drian, appeared. So, the French Foreign Minister is very worried about another delay and wants the British to hear what they want at all. Le Drian also added that we are not going to provide a respite every three months. Criticism is a completely normal occurrence, but they will give a delay, let's recall only the statement of the European Commission back in August when they proposed this delay. Finally, there was news that Boris Johnson's office was again under pressure, and so, Minister for Labor and Pensions Amber Rudd resigned due to disagreements with the Prime Minister.
Today, in terms of the economic calendar, we have data on industrial production in Britain, where, as expected, there is a decrease of 0.9%. In the center of events, of course, is the background information about the vote in Parliament on early elections. However, the House of Commons, although it is ready to go to early elections, is not October 15, as Johnson wishes, but October 30. Thus, pressure in terms of background will remain in the market, which again can play into the hands of volatility.
Further development
Analyzing the current trade chart, we see that the pound once again reeling, recovery quotes is at the limit of return, which contributed to forcing the background information. Speculators, in turn, are insured and fix previously opened short positions in the sense that due to the upcoming vote, trading forces can change, and you need to be ready for this.
It is likely to assume that the fluctuations within the corridor of 1.2270/1.2350 will remain for a long time, but it is possible to exit the framework today. Therefore, we analyze the boundaries for breakdown and try to enter the market precisely on the branch of the movement.
Based on the above information, we will derive trading recommendations:
Technical analysis
Analyzing a different sector of timeframes (TF), we see that the indicators in all major time areas again took an upward position, but due to the high background indicators bear a variable character again.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 9 was built taking into account the time of publication of the article)
The volatility of the current time is 110 points, which already exceeds the daily average by 13%. It is likely to assume that the volatility of the day can still rise to the limits of 140 points due to the same information background.
Key level
Resistance zones: 1,2350**; 1,2430; 1,2500; 1,2620; 1,2770**; 1,2880 (1,2865-1,2880)**.
Support zones: 1,2150**; 1,2000***; 1,1700; 1,1475**.
* Periodic Level
** Range Level
*** The article is based on the principle of conducting transactions, with daily adjustments.
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