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The pound/dollar currency pair still managed to accelerate after a short fluctuation within the values of 1.2510/1.2570, breaking the upper border and heading towards the resistance level of 1.2660/1.2690, which reflected the conditional highs from June 16 and July 9. Regarding the details of the jump in the value of the pound sterling, it is worth highlighting here the speculative background that arose at the start of the European session and lasted until the end of the trading day, raising the quote just to the area of the established maximums
Market dynamics, in turn, reflected the highest volatility indicator since the beginning of the month and amounted to 147 points, which is 32% higher than the daily average.
The news background of the past day did not have any significant statistical data on the UK and the United States, but, as we see from the result, this fact did not stop speculators.
In this case, information noise played the role of a catalyst for speculative activity due to the background coming from the UK government regarding the COVID-19, quarantine and vaccines. And now, in order: at the beginning, British Prime Minister Boris Johnson expressed his reluctance to introduce a second national quarantine, saying that the country already understands the entire localization process much better and these measures, like quarantine, are no longer needed.
"It's not just that we are getting much better at identifying the disease and its location, but we are much better understanding which groups it affects, how it works, and how it is transmitted," Boris Johnson said.
The second tool to control the emotions of the British, as well as investors, was the government's partnership with pharmaceutical companies, which ensured early access to 90 million doses of promising vaccines against coronavirus infection.
This background, although locally, still plays in favor of the strengthening of the pound, but has no long-term effect.
In turn, BoE's Chief Economist, Andy Haldane, said on Monday that the UK economic recovery is still looking V-shaped and the economy has recovered about half of the output it lost in March and April.
Today, in terms of the news background, we have an empty economic calendar again, but, as the practice of traders has shown, this does not stop. We follow the technical picture, and also listen to the information background.
From the point of view of a comprehensive analysis, we see a full-fledged inertial movement from the pivot point of the previous week at 1.2500/1.2510, where the speculative excitement does not pay attention to the characteristic overbought of the pound. This factor indicates the possibility of further price growth, but everything can change quickly as soon as speculators are saturated and start fixing long positions.
The burning forecast is that the current sentiment may lead the quotation to the area of the range level of 1.2770, where already within its limits (1.2755 / 1.2770) sharp fixing of trading volumes is not excluded, which will lead to a reverse price movement.
Based on the above information, we will display trading recommendations:
- Consider buy deals if the price is held higher than 1.2700, towards the range level 1.2770
- Consider sell deals in case of reduction of long positions amid overcooling in the area of 1.2755/1.2770 or with a sharp decline relative to the coordinates. The second option requires price consolidation below 1.2650.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments relative to the minute, hourly and daily periods signal buying due to the inertial price movement, as well as consolidating above the highs on June 16 and July 9.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year.
(July 21 was built taking into account the time of publication of the article)
The volatility of the current time is 65 points, which is 41% below the daily average. It can be assumed that if the speculative mood is maintained, volatility will continue to grow.
Key levels
Resistance zones: 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support zones: 1.2620; 1.2500; 1.2350 **; 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
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