empty
 
 
You are about to leave
www.instaforex.eu >
a website operated by
INSTANT TRADING EU LTD
Open Account

12.01.202103:33 Forex Analysis & Reviews: Overview of the GBP/USD pair. January 12. The UK is once again gripped by the epidemic. The workload of hospitals is maximum. "Lockdown" doesn't help yet.

This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here.

4-hour timeframe

Exchange Rates 12.01.2021 analysis

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -97.8077

The British pound sterling paired with the US currency also continues to fall for several days in a row. However, in the case of the British pound, this decline does not look like the beginning of a new downward trend. One has only to look at the chart of the pair's movement over the past couple of months and it becomes clear that this is not the first drop in quotes by several hundred points. But every time after that, the upward movement resumed. This time the upward trend may resume, although we continue to insist that the pound is extremely overbought and it is high time for it to go south. Thus, we recommend that you do not rush to conclusions. Traders should understand that from a fundamental point of view, the pound should not have been rising in the last few months, so they should be prepared for the fact that a new downward trend will begin. But you should trade according to the current trend.

After Brexit and trade negotiations are officially behind us, all news from the UK is exclusively about the "coronavirus". The country has already fallen into the third "wave" of COVID-2019, the country has already closed for the third "lockdown", a new strain of the disease has been detected and is spreading in the country, the number of cases of infection has tripled in recent weeks. Thus, only bad news comes from Foggy Albion. And this is not just bad news of an epidemiological nature. They will have consequences for the economy. We have said before that the UK economy will suffer anyway because of Brexit. In any case, it will suffer losses due to the second "lockdown". And now for the third. Vaccination, which began in Britain, is good, but so far it does not give results yet. Thus, we expect both a fall in the economy at the end of 2020 and the beginning of 2021 and a new fall in the pound.

British Prime Minister Boris Johnson, meanwhile, reported the maximum workload of hospitals since the outbreak of the epidemic. According to Johnson, the infection rate continues to rise. The Prime Minister again asked UK residents to stay at home and comply with quarantine rules. It is reported that in just one day on January 8, almost 1.5 thousand Britons died. The media say that the British population observed quarantine very poorly and does not adhere to many rules.

At the same time, a poll was conducted in Britain, which showed that only 40% of respondents want Boris Johnson to continue to remain prime minister of the country. 43% were in favor of Johnson leaving office. Of course, it is also necessary to take into account the commitment to a particular party of each respondent. However, in general, the number of Britons dissatisfied with Johnson's work is growing, and the number of satisfied people is decreasing. Also, 72% of respondents believe that the government has not been effective enough in countering the "coronavirus". 48% of respondents do not approve of the government's actions in the context of the pandemic.

Thus, perhaps now is the time when traders will finally begin to pay attention to reality. And for the UK, this reality is very harsh. Of course, not all the bad things that are predicted will necessarily come true. For example, the "Scottish question" may well be resolved calmly and without a new "divorce". But at the same time, the future of the UK is once again clouded and the level of uncertainty is still off the scale. And the trade deal with the European Union has not changed much. It only saved the British economy from even greater losses. Now Boris Johnson will have to negotiate a trade deal not with his "friend" Donald Trump, but with Democrat Joe Biden, who is very cool about the British Prime Minister. Britain needs a trade deal with the US, however, it will be very difficult to negotiate. In general, the year 2021 may bring new disappointments to the Kingdom.

From a technical point of view, the pound/dollar pair is fixed below the moving average line, but both linear regression channels are still directed upwards. Thus, so far we have formed a short-term downward trend. Will it last, that's the question? This may be another not too strong correction, after which the same growth will resume, which was completely groundless before. By and large, now the pair continues to be in the "high-volatility swing" mode. Therefore, traders should keep this in mind when opening any positions.

Exchange Rates 12.01.2021 analysis

The average volatility of the GBP/USD pair is currently 109 points per day. For the pound/dollar pair, this value is "high". On Tuesday, January 12, thus, we expect movement inside the channel, limited by the levels of 1.3414 and 1.3632. The reversal of the Heiken Ashi indicator downwards signals a new round of downward movement.

Nearest support levels:

S1 – 1.3489

S2 – 1.3458

S3 – 1.3428

Nearest resistance levels:

R1 – 1.3519

R2 – 1.3550

R3 – 1.3580

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe began a round of upward correction within the new downward trend. Thus, today it is recommended to open new short positions with targets of 1.3489 and 1.3428 if the price bounces off the moving average or the Heiken indicator does not turn down. It is recommended to consider buy orders with targets of 1.3611 and 1.3632 if the price breaks the moving average line.

Paolo Greco
Analytical expert of InstaForex
© 2007-2024

Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.




You are now leaving www.instaforex.eu, a website operated by INSTANT TRADING EU LTD
Can't speak right now?
Ask your question in the chat.

Turn "Do Not Track" off