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Using complex analysis, we can see the acceleration of quotes from the mirror level towards the main range.
The past trading day was oriented towards a further downward move, in which the quotes successfully accelerated from the mirror level of 1.2350, updating the monthly low.
The quotes moved from the range level of 1.2770, and reached not just the previous range 1.2150 // 1.2350 // 1.2620, but also almost to the lower border, which could inevitably mean a complete recovery relative to the movement on May 25.
Such bearish mood suggests that the prospects of a downward trend, which consists of a consistent update of historical lows, could occur but is still quite uncertain as the market is still under emotional shocks due to endless external background.
Hence, the strategy remains in terms of local operations, which follow the waves of speculative activity in the market.
Analyzing the past trading day every minute, a round of short positions was recorded from the beginning of the European session, which led the quotes towards 1.2250. There, a stop and a rollback to 1.2310 / 1.2315 occurred, which coincided with the slowdown in the previous period.
With regards to volatility, a 12% acceleration is recorded relative to the average daily indicator. Such is a good signal for the further movement of quotes.
As discussed in the previous review, traders focused on lowering the prices to the level 1.2350. If the quotes consolidated lower than 1.2310, short positions were prolonged.
Analyzing the daily chart, we can see the outlines of a V-shaped pattern, the completion of which will occur when the quotes touch the level 1.2150. It is impossible to be certain whether this pattern will restart the downward trend in the market, as everything will depend on whether the sellers manage to maintain the tact and consolidate the quotes below the psychological level 1.2000.
Meanwhile, the news published yesterday contained data on the UK lending market, which turned out to be very terrible than expected. According to the report, the number of approved mortgage loans decreased from 15.9 thousand to 9.3 thousand, much different from the forecast of 26.4 thousand. The volume of consumer lending also decreased by 4.6 billion pounds, and the only positive indicator was the volume of mortgage lending which grew by 1.2 billion pounds.
In the afternoon, data on pending home sales in the United States was published, in which the indicator for May recorded a jump of 44.3%, which gave optimism to the US dollar.
As for the United Kingdom, British Prime Minister Boris Johnson commented on the current situation of the country with regards to the coronavirus pandemic, noting it as "a disaster" and "absolute nightmare" for the country.
"We experienced a deep shock, but it is at these moments that we have the opportunity to change and do something better. We really want to develop better, act differently, invest in infrastructure, transport, broadband," Johnson said.
The Prime Minister also said that the time has not yet come to study the errors that occurred during the peak of the pandemic.
"I don't think that this is the right moment to devote a huge amount of official time to this, but we are learning lessons all the time and, obviously, will draw the right conclusions for the future," he added
With regards to the Brexit divorce proceedings, for the first time in a long time, a personal meeting was held between two negotiators Michel Barnier and David Frost, where the European side is determined that the dialogue will continue for several months and Britain still does not consider the extension of the transitional period.
Today, the final data on the UK GDP for the first quarter came out, in which the decline rate was -1.7%, instead of the forecast -1.6%. Such weak data lowered the demand for the British pound.
Further development
Analyzing the current trading chart, we can see an attempt to update the low reached yesterday, but the level of 1.2250 still holds short positions for further price reductions. Such a scenario is just temporary, as a bearish mood still prevails in the market, thereby continuing the move towards the lower boundary of the main range 1.2150 // 1.2350 // 1.2620.
If the quotes consolidate lower than 1.2250, the pair may move towards 1.2200 - 1.2150. There, a slowdown will occur, followed by a rebound.
Based on the information above, we present these trading recommendations:
- Sell positions lower than 1.2250, towards the values 1.2200-1.2150
- Buy positions when the quotes consolidate higher than 1.2315, directing towards the values 1.2350-1.2385.
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that all the indicators of technical instruments unanimously signal sell, focusing the quotes on a downward bar.
Volatility per week / Measurement of volatility: Month; Quarter Year
The measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(June 30 was built, taking into account the time of publication of the article)
The volatility of the current time is 56 points, which is 54% lower than the average daily value. If the downward tact remains and the quotes consolidate lower than 1.2250, volatility will increase.
Key levels
Resistance zones: 1.2350 **; 1.2500; 1.2620; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1,1000; 1,0800; 1,0500; 1,0000.
* Periodic level
** Range Level
*** Psychological level
**** The article is based on the principle of conducting a transaction, with daily adjustments
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