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4 hour time-frame
Amplitude of the last 5 days (high-low): 53p - 82p - 138p - 65p - 66p.
Average volatility over the past 5 days: 81p (average).
What can be said about the GBP/USD currency pair following the results of last Friday, last week, and the past two months? Only one. Traders ignored almost all macroeconomic statistics for this period. Almost all macroeconomic reports from the UK over the past 2 months have been either extremely weak or completely failed. Only a small fraction of the "numbers" was more or less "at the level". Moreover, everything also applies to data from overseas. Almost all reports from the United States, which were often quite strong, were ignored by traders. Thus, the pound would now be stealing back to multi-year lows of about 1.2000 - 1.2300, if market participants reacted to these news and reports. Based only on this, we can conclude that the pound is now either very much overbought, or may collapse at any moment as soon as traders recall all the statistics that they ignored. Meanwhile, the British currency continues to grow solely on expectations of a favorable parliamentary election outcome, which is now identified with a Brexit favorable outcome in late January. There can only be one "favorable outcome" now - the victory of conservatives in the elections, in which they won at least 325 seats in the British Parliament. It is such an election finale that will allow Boris Johnson to implement Brexit before the end of January and put at end in this epic. However, traders do not seem to admit even the slightest probability that the election may end in any other way. Otherwise, the pound would have fallen from the value against the US dollar by not 30 points on Friday, and not at a time when there were no macroeconomic publications at all.
On the other hand, there were no important macroeconomic news in the UK last Friday, but this is not important, since traders are not interested in them now. During the last trading day of the week, volatility was below average. Thus, none of the range levels of the day has been reached. As for the most controversial topic of parliamentary elections, all parties continue to prepare for December 12, which is just around the corner. Next Thursday, the elections will finally be held and the results will be known on December 13. Then next week, the pound may return to the usual trading mode, when traders will develop all the news and macroeconomic data regarding the pair. Meanwhile, Boris Johnson played football in the English city of Cheadle as part of the final week of preparations for the 2019 Elections. He also announced that he will invest 550 million pounds in the development of this sport on the eve of the 2030 World Cup, which will be held in the UK if his party wins the election. In turn, Jeremy Corbyn drank coffee and met with leaders of the Welsh Labor Party. Liberal Democrats leader Jo Swinson played tennis at Shinfield, while Nigel Farage rode small businesses in Sedgefield England. As we can see, it seems that the leaders of the main political forces of Great Britain have already played all the Trump cards. As a result, it is unlikely that the mood of the electorate will change dramatically over the next few days. Despite that, opinion polls and social research still talk about the leading positions of conservatives, but Labor also "breathes in their backs," either reducing or widening the gap. Thus, at the moment, we still can not say with certainty at least 80%, whether the conservatives will win the election with the necessary margin from labour and other parties or not.
Based on this, we still recommend following the trend until December 12. That is, to put technical factors in the lead. Due to the fact that it will be possible to build further trade plans for December-2019 after the election is over and it becomes clear what kind of alignment of political forces will be in the Parliament. In addition, we believe that if Boris Johnson's party does not get enough votes, then the pound may fall down in the same way as it soared up two months ago. Now, the technical picture speaks of the minimal downward correction that began on Friday, which, however, could already be completed. Then, on Monday, the upward movement may resume, which completely contradicts the current fundamental background. More so, even technical corrections can now be completely shallow, similarly as on Friday.
Trading recommendations:
The pair GBP/USD is minimally adjusted at the moment. Thus, it is now recommended to trade for an increase with the target of 1.33234 since the pair managed to get out of the side channel as well as review new targets tomorrow morning to buy the British pound which will be determined based on average volatility and standard support/resistance levels. On the contrary, it is not recommended to consider pound sales now. Since the pair is very far from the Kijun-sen critical line, traders ignore any macroeconomic data, and the pound rises in price exclusively on the subject of parliamentary elections.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
Support / Resistance Classic Levels:
Red and gray dotted lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movement options:
Red and green arrows.
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