17.10.201907:32 Forex Analysis & Reviews: Overview of GBP/USD on October 17th. Forecast according to the "Regression Channels". The markets are receiving an increasing number of signals about a positive outcome of Brexit

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: 112.4181

Well, another X day for the British pound and the whole of the UK has arrived. The EU summit kicks off today, where Alliance leaders must decide whether to agree to the terms proposed by Boris Johnson on the border on the island of Ireland, which should solve the problem of finding an alternative to the "backstop" mechanism, or not. Some European leaders have already expressed their positive views on the course of negotiations. Among them are Angela Merkel, Emmanuel Macron and Donald Tusk. This is very strange because a week ago, all three were skeptical and gave extremely low chances of concluding a "deal" with London. However, we have what we have. If these statements of the presidents of Germany, France, and the European Council are not groundless, then the "deal" can indeed be signed today. However, for the British currency, this does not necessarily mean a new strengthening against the dollar. Given the growth of more than 600 points in recent days, we can say that traders have already worked out a "soft" divorce of the EU and Britain. Also, we believe that at the moment the main concerns may be related to the UK Parliament. As practice shows, it is possible to agree with the European Union, but convincing deputies to vote for the proposed version of the deal is a daunting task. Checked by Theresa May. Thus, we have two X days at once. The first is today, and the second is on Saturday, October 19. This is the first time in many years that parliamentarians will gather on a day off. On the other hand, the situation requires radical measures.

As for the British Prime Minister himself, with whose name Brexit may be associated in the first place, the whole point of the question is what concessions Johnson made in negotiations with Brussels. Because, as we have already said, it is not enough to agree with the EU, the parliament must approve this "deal". If by some miracle all three parties can agree, then this will be Johnson's huge victory, perhaps the first, but what kind. Talk of impeachment, a vote of no confidence and resignation will immediately disappear, and political career will be saved.

All news and macroeconomic reports not related to Brexit on Thursday, October 17, for obvious reasons, fade into the background. Yesterday, macroeconomic statistics from the UK were ignored, most likely today the retail sales report for September is waiting for the same.

The technical picture shows an upward trend that is entirely based on rumors and positive expectations of the completion of negotiations between London and Brussels. Thus, long positions are relevant now, but we continue to warn traders that a sharp rise may well be replaced by an equally strong fall of the pair if the "deal" is not signed.

Nearest support levels:

S1 – 1.2695

S2 – 1.2573

S3 – 1.2451

Nearest resistance levels:

R1 – 1.2817

R2 – 1.2939

Trading recommendations:

The GBP/USD currency pair continues a strong upward movement. Thus, it is quite reasonable to support previously opened purchases of the pound. We would not recommend opening new buy orders ahead of the EU summit. We still believe that the growth of the pound to some extent is not justified, and the pair may return to the downward direction in the coming days. In any case, any positions are now associated with increased risks.

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 – red horizontal lines.

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