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24.11.202001:55 Forex Analysis & Reviews: GBPUSD: hope for a bright future or a big game of speculators

Company does not offer investment advice and the analysis performed does not guarantee results.
The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Trade negotiations on the long-running Brexit separation process went online due to the fact that one of the members of the EU team was infected with the COVID-19 virus.

Whether the negotiations happen online or offline doesn't make a difference when you're stuck in one place. The negotiations have been focused on fishing and competition issues for a long time but until one of the parties makes concessions, we will not move forward, as much as speculators would like.

Unreasonable expectations

When monitoring the media, it was noticed that many well-known publications refer to imaginary sources and spread rumors that the parties have agreed on 95% of a trade agreement. Of course, there are no details but these sources claim that it may take another 3-5 days to complete the transaction. At the same time, the issues of fishing and competition remain open.

An increase in the value of the Pound without a foundation of reliable information can lead to an increase in unjustified expectations and this will lead to a local devaluation, if nothing sensible comes out of the deal.


During the weekend, there was another rumor that Britain offered a number of EU countries to conclude a trade deal among themselves, outside the EU bloc, to which the European Commission reacted sharply, bypassing what it considered illegal transactions.

Now the question is: if the negotiations are going so well and there is supposedly 95% of the work done, why do the British authorities offer mini-deals? The answer to this question is already known to you-- the negotiations are still in place.

The UK Treasury Secretary, aka Chancellor of the Treasury Rushi Sunak, said during Andrew Marr's Sunday BBC show that he was optimistic about a trade agreement with Europe but the negotiations should be constructive and that they do not need a deal at any cost.

The decision of the British is clear: they are not ready to make concessions.

Now, with nowhere to go, it's time for Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen to step in, as MEPs' rumours indicated two weeks ago.

In terms of technical analysis, we can see that in the period of October 20, there was an anomaly in the form of a sharp slowdown in volatility where the quote conditionally froze in one place, having an amplitude of 1.3250/1.3295.

Such a decline in activity was last observed on July 3, where the dynamics were only 48 points per day. It is worth noting that at that time, western traders did not work in connection with the celebration of Independence day, which was moved to the weekend from July 4 (Saturday) to July 3 (Friday).

This time, the trend was 49 points, which is 58% below the average level, but there were no holidays in the United States, Great Britain, and Europe.

Such a strong decline in activity is a signal of the upcoming acceleration or coordinate changes in the market, which I wrote about in Friday's review to prepare traders for possible price changes.

Looking at the trading chart in general terms (daily period), you can see that the September downtrend of 1.3480 to 1.2674 is considered complete and the risk of resuming the medium-term trend is high.

Today, in terms of the economic calendar, we published preliminary data on the business activity index in the UK, where we expected a decline in indicators but instead saw an increase. So, in the manufacturing sector, the index rose from 53.7 to 55.2, the forecast was 50.5. In the service sector, the picture is identical as the forecast did not match the actual outcome. They expected a decrease from 51.4 to 42.5 but instead received up to 45.8.

The market reaction at the time of publication of the data was not expressed by anything unusual. The price movement was already set in the market.

In the second half of the day (14:45 UTC) published a similar index, but for the United States, where it was predicted that the manufacturing sector index may decline from 53.4 to 52.9. In the US services sector, a decline is being considered from 56.9 to 54.5. The data is not ideal so at the time of publication of statistics, the US Dollar may come under local pressure in terms of weakening its value.

Exchange Rates 24.11.2020 analysis

Analyzing the current trading chart, you can see that the level of 1.3300, which for a long time played the role of resistance in the market, still fell under the onslaught of buyers with a little less than 100 points left to the local maximum.

Speculative behavior of market participants is visible to the naked eye. Friday's stagnation played into the hands of long positions.

From the point of view of graphical analysis, there is a performance of the ascending triangle pattern, which we identified in the review of November 20.

The pattern structure is highlighted in red on the chart.

If we proceed from the subsequent movement, the chance of touching the local maximum on September 1 at 1.3480 still exists in the market. It is worth considering that there is a high probability that the volume of long positions will decrease near the 1.3480 area, as it happened in the previous period.

Regarding speculative manipulations, it is worth carefully monitoring the information flow regarding the topic of Brexit. We are interested in the negotiation process itself. It is rumored that face-to-face meetings of the negotiating groups will resume on Wednesday but perhaps information on hot topics like fishing and competition will appear even earlier

Exchange Rates 24.11.2020 analysis

Indicator analysis

Analyzing a different sector of timeframes, it is clear that the indicators of technical instruments unanimously signal a purchase due to the breakdown of the resistance level of 1.3300, as well as a recovery relative to the September decline.

Exchange Rates 24.11.2020 analysis

The volatility for the week / measurement of volatility: month, quarter, and year

The measurement of volatility reflects the average daily fluctuation, calculated for the month, quarter, and year.

(November 23 was based on the time of publication of the article)

The dynamics of the current time is only at 119 points, which is 142% higher than the dynamics of November 20. The acceleration forecast coincided but this is only the beginning, as speculators are already in the cage, which means that there are many more chaotic price jumps ahead of us.

Exchange Rates 24.11.2020 analysis

Key levels

Resistance zones: 1,3480; 1,3600; 1,3850; 1,4000***; 1,4350**

Support areas: 1,3300**; 1,3175(1,3200); 1,3000***; 1,2840/1,2860/1,2885; 1,2770**; 1,2620; 1,2500; 1,2350**; 1,2250; 1,2150**; 1,2000*** (1,1957)

* Periodic level * * Range level ***Psychological level

Gven Podolsky
Analytical expert of InstaForex
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