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The GBP/USD pair completed the three-day accumulation process with an active surge of long positions, which led to the formation of a technical correction relative to the local low of 1.2674.
A change in the market sentiment in the form of a technical correction is considered a temporary phenomenon, and this is due to the high rate of change in quotes since the beginning of September. The renewal of local lows and the breakdown of the control level of 1.2770 is considered an indisputable fact, which may lead to an even more impressive decline in the pound rate in the future.
Analyzing yesterday's fifteen-minute TF, you can see a round of long positions that arose from 7:15 am and lasted until 11:00 am UTC+00. As a result, the pound locally strengthened in value by 160 points. However, the buyers' joy was temporary, since there was a pullback followed by a slowdown during the US session.
In terms of daily dynamics, an acceleration of 40% relative to the average level is recorded, which is considered a typical phenomenon after a long stop, in this case, a three-day accumulation.
As discussed in the previous analytical review, market participants considered the possibility of forming a technical correction in the event of a breakdown of the accumulation limit.
Looking at the trading chart in general terms (daily period), it is clear that the downward tact from the first of September is not broken by the current correction. Thus, there is a high chance of resuming the downward movement.
Yesterday's news background did not have any significant statistical data from the UK and US.
In terms of the information background, British Minister for Special Assignments, Michael Gove was interviewed by the Sky News TV channel, during which he said that Britain would not change the content of the bill that contradicts the terms of the Brexit deal, although this is required by the European side.
Michael Gove said that there are those in the European Union who have expressed concern about some of the provisions that have been introduced into the draft law "On the Internal Market", but during a meeting with European Commission President, Maros Sefcovic, he stressed that these provisions are only insurance. He also said that they want to reach an agreement at the level of a joint UK commission and the EU on Brexit, guarantee the protection of Northern Ireland's status as part of the UK and strive to fully implement the agreement to leave the EU.
It is worth recalling that the next round of trade negotiations between England and Brussels will start today.
In terms of the economic calendar, the UK lending market for August will be released today, where we can expect positive dynamics. This stream of statistics can locally support the pound, but only temporarily.
Further development
Analyzing the current trading chart, you can see a variable price fluctuation at the top of the correction move. The values are used as time limits 1.2825/1.2885/1.2910 where to resume the downward interest, the quote needs to be consolidated below 1.2820, which may lead to a price movement towards 1.2770-1.2700.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on the minute and hour periods signal a buy due to technical correction. In turn, the daily TF signals a sell, focusing on the depth of the decline in September.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(It was built considering the time the article was published)
The volatility of the current time is 50 pips, which is 60% below the average. It can be assumed that volatility will continue to grow due to the high coefficient of speculative operations.
Key levels
Resistance zones: 1.2885 *; 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support zones: 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).
* Periodic level
** Range level
*** Psychological level
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