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The pound/dollar currency pair has been showing weak volatility for seven trading days, which is the reason for such indecisive behavior of market participants - we will analyze in our article – we will analyze in our article
From technical analysis (TA) came what many expected, a slowdown with a consistent oscillation in terms of lateral movement. The psychological level of 1.3000 did not succumb to the onslaught of insatiable buyers, but there was no such strong desire to overcome the benchmark. It is worth analyzing the volatility of recent days (58 – 65 – 97 – 62 – 75 – 45 – 67), and you will see that for seven days in a row, we have seen extremely weak action in terms of resuming the upward course. As a result, the primary testing of the range level of 1.2770 (1.2750/1.2770/1.2800) led to the boundaries of the psychological level of 1.3000, where a closed price fluctuation within the two levels determined the fate of the quotation for the near future. In terms of the emotional component of the market, we see that indecision to integral actions pushes bidders to cautious trading decisions and a greater extent, forcing them to be out of the market.
Analyzing the hourly past day, we see that almost all trading forces were directed to the downward positions, but it is worth noting that the oscillation was very weak, that even in this situation, when working out such a strong level of 1.3000, this is an atypical reaction.
As discussed in the previous review, traders considered two options at once: up, in the case of a breakdown of the level of 1.3000, and down, in the case of a flight of the value of 1.2925. As we can see from the result, the lowering tactic worked, were in the form of the gradual progress of the transaction, they went to the predicted coordinates of 1.2860 – 1.2800.
Looking at the trading chart in general terms (the day), we see that at the peaks of the inertial course, a V-shaped amplitude has already formed, which some traders have nicknamed the possible basis of one of the graphical models (patterns) of the reversal. We will continue to observe what is happening at the height.
The news background of the past day had an index of business activity in the UK construction sector, where there was an increase from 43.3 to 44.2, but the changes are insignificant and with a general aggravating background.
The information background has an endless stream of discussions regarding Brexit and the upcoming elections, which no longer affects the market so much, but still retains the interest of market participants. So, last week, US President Donald Trump criticized Johnson's agreement, saying that it's not perfect and will not allow full work. In turn, the British Prime Minister nevertheless answered the reproaches with mirror criticism.
"I do not want to denigrate the US president, but in this case, he makes a clear mistake. Anyone who studies our agreement will see that this is a great agreement," Boris Johnson said.
In terms of early elections, an active campaign program is being conducted, and so, the British Prime Minister traditionally declares that if he wins the elections in December, he will guarantee to withdraw the country from the eurozone. Johnson wrote a letter to the leader of the opposition Labor Party, Jeremy Corbyn, where he stated verbatim: "And we will leave the EU by the end of January based on a new deal that has already been agreed with Brussels." – Twitter Boris Johnson @BorisJohnson.
Corbyn, on the other hand, wants to give the people of Britain another chance to think and oppose American corporations.
Naturally, the opposition leader's moves are fundamentally disliked by hedge funds and corporations, who are now flocking with financial support to Boris Johnson, as only he will preserve and multiply what they already have.
Today, in terms of the economic calendar, we have the business activity index in the services sector PMI, where there is a small increase from 49.5 to 49.7. In the afternoon, we are waiting for data on the United States, which will publish the non-manufacturing PMI (PMI) from the ISM, with an increase of 52.6 – 53.5, as well as open jobs JOLTS.
Further development
Analyzing the current trading chart, we see a small spike in long positions, which led to the formation of a pullback against the background of the downward course of the past day. The same ambiguous mood still holds the quote, and it is still extremely early to talk about radical changes, only about local jumps, that's what we are talking about. Volatility, in turn, continues to operate at low levels, which once again confirms the extremely cautious approach of market participants.
By detailing the movement per minute, we see that the period of the Pacific and Asian trading sessions led to stagnation, where locally a surge of long positions was formed, possibly at the stage of fixing. The surge occurred in the period 09:00 – 10:00 (trading terminal time).
In turn, speculators on the existing stagnation partially left short positions, but still, the prospect of a deeper decline remains, since, in theory, we should return to the fulcrum in the form of a range level.
It is possible to assume that the downward local interest will remain in the market, where the quote will gradually reach values such as 1.2800 – 1.2770. After that, it is worth following the circumstances, as the theory of movement in the wide corridor of 1.2770/1.3000 is still relevant. At the same time, the tactic of monitoring the news feed for outbursts about Brexit and the election remains.
Based on the above information, we derive trading recommendations:
Indicator analysis
Analyzing different sector timeframes (TF), we see that the indicators have a multidirectional characteristic. Short-term intervals worked on local outbursts, signaling purchases (variable indicator). Intraday intervals work in the recovery phase, signaling sales. The medium-term outlook invariably maintains an upward mood due to the same inertial course.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation calculated for Month / Quarter / Year.
(November 5 was built taking into account the time of publication of the article)
The current time volatility is 26 points, which is an extremely low indicator for this time section. It is likely to assume that the growth of volatility today is still worth waiting for, where in the case of a break of 1.2875, maybe we can still see the acceleration of volatility.
Key levels
Resistance zones: 1.3000; 1.3170**; 1.3300**.
Support zones: 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 based on the principle of conducting transactions, with daily adjustments.
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