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Over the past trading day, the pound / dollar currency pair showed a high volatility of 133 points, which is good news for speculators, yet for the third day in a row, we have a high fluctuation amplitude on which it was possible to earn money. From the point of view of technical analysis, we see another quotation returning to the level of 1.2500, where we already felt periodic resistance above previously. So what is it, the rising interest still prevails in the market? - to some extent this is true, local growth, but growth is largely due to the emotional component of the market, so the instability of information flows and escalating fear drive the quote up / down.
As discussed in the previous review, traders have been working in the recovery phase since Monday with an initial development of the level of 1.2500. Massive profit taking was already made yesterday, leaving a small fraction of the trading volume in the market, with floating stop loss. Considering the trading chart in general terms (daily period), we see that an oblong correction is still being maintained in the market, concentrating on the level of 1.2500. Whether there will be a recovery in a downward trend, the question is still open, since there are plenty of factors for the decline of the English currency.
Meanwhile, the news background of the past day contained data on industrial production in the United States, where they expected slowdowns from 0.5% to 0.2%, but received not so bad indicators, since the slowdown amounted to 0.4%. As the American dollar reacted to all this, a rather strong weakening, and completely different factors played here. Thus, yesterday, the Federal Reserve for the first time in 10 years began urgently pouring dollars into the US financial system due to the acute shortage of dollars on the interbank market. The amount of injections goes to billions, and so, the first gulf of $ 53.15 billion, the second even more, $ 75 billion. Now, we understand why the dollar began to fall fleetingly on all fronts of the market. In this wonderful situation, I don't want to, but I have to believe that at the current meeting of the Federal Committee for Operations on the Open Market they will lower the base rate, and what options are there when there are such catastrophic developments.
The information background continues to flounder in Brexit's divorce proceedings. Thus, the British Supreme Court held its first meeting on the legality of the decision of Boris Johnson to suspend the parliament. If, nevertheless, the court finds the prime minister's decision illegal, Johnsan's career will not just go downhill, it will fly into the pipe, like all attempts to leave the European Union on October 31. London, in turn, is negotiating with Brussels on a new agreement, however, it is not a fact that concrete written proposals will be submitted to the EU before the summit on October 17-18. Boris Johnson again takes the all-in position, waiting for the last day.
In turn, the president of the investment company Blackstone Group, Jon Gray believes that now is one of the best investment opportunities in the UK, because investors are fleeing the country and assets can be purchased at a better price.
Today, in terms of the economic calendar, we have data on inflation in Britain, where they expect a slowdown from 2.1% to 1.9%, which may put local pressure on the pound. The key event of the day and even the week is the meeting of the Federal Committee for Open Market Operations, where a decision will be made regarding the refinancing rate. Talks about rate cuts have been going on for quite some time, and the latest event with the flooding of dollars into the financial system has further fueled the interest of market participants.
18:00 Universal time - Decision on the Fed interest rate: 2.25% ---> 2.00%
18:30 Universal time - FOMC press conference
Further development
Analyzing the current trading chart, we see that the quote feels the resistance level again in the face of the value of 1.2500, slowing down the movement and forming a pullback. The fact of local overheating of long positions due to a jump of 11:00 - 17:00 Universal time (September 17) could play the role of exacerbation of short positions. Speculators, in turn, can not get enough when there is a jump every day. Work on the principle of restoring quotes at the overheating phase of long positions is ongoing.
It is likely to assume that at first we can see the restoration process in the direction of 1.2450-1.2430, but then stagnation is possible, just before the FOMC meeting. I will say this, price jumps are provided today, but first, you need to understand where the quotation will be at the end of the trading day in order to make the best trading decision at the time the refinancing rate is announced.
Based on the above information, we derive trading recommendations:
- Buy positions are considered in case of fixing the price higher than 1.2530 or wait until 20:00 Moscow time and make a trading decision regarding current points.
- Sales positions are already being conducted in the form of a recovery process 1.2450-1.2430. A deeper move is also already being considered with respect to price fixation points in the time interval 20: 00-21: 00 Moscow time.
Indicator analysis
Analyzing a different sector of timeframes (TFs), we see that indicators in the intraday and medium term tend to increase due to the recent jump in quotes, while indicators in the short term took a downward position, reflecting the recovery process.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 18 was built taking into account the time of publication of the article)
The current time volatility is 44 points. It is likely to assume that due to the strong informational and news background, the volatility of the day is expected to be high, exceeding the daily average.
Key levels
Resistance zones: 1.2500 **; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support areas: 1.2350 **; 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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