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4-hour timeframe
Amplitude of the last 5 days (high-low): 55p - 79p - 58p - 57p - 115p.
Average volatility over the past 5 days: 81p (average).
The British pound began a semblance of an upward correction on Monday, January 20, towards the end of the day. There is only one bullish bar at the moment, so it's hard to say whether such an increase in the pair can be considered the beginning of an upward correction. The pound volatility has recently decreased, but remains in the "average" value. The weakness of the bulls is visible to the naked eye, however, there are few sellers around 1.3000. Despite the fact that macroeconomic statistics from the UK fail from time to time. Buyers of the British pound did not manage to overcome the Ichimoku cloud, which is why we are inclined to continue moving down. Today, fortunately for the British currency, there have been no important macroeconomic publications. Nevertheless, some interesting news was made available to traders. This news, as always, is not in favor of the British currency.
In past articles, we have repeatedly said that negotiations between London and Brussels will be difficult, and there may be a huge number of potential problems for Great Britain during 2020. Starting with the lack of an agreement with the European Union, which will put an end to the orderly Brexit, ending with problems with Gibraltar, Scotland and Ireland. It is with the problems with Gibraltar that British politicians may face in the near future. The problem is that Spain has claims on Gibraltar, to which it belonged several centuries ago. Gibraltar voted against leaving the European Union. Several thousand people are sent to Gibraltar from Spain every day to work. And if Gibraltar leaves the EU with Britain, the visa regime will be introduced accordingly. That is, from February 1, about 15 thousand people will be forced to pass passport control at the border, which is only 1.8 km, daily. The British government has already stated that after Brexit, Gibraltar will not be able to independently agree on a visa-free regime with the European Union. Government spokesman Boris Johnson said the "issue of the liberals" would be part of a deal between London and Brussels about future relationships. London's position on this issue is clear and logical. The border with Gibraltar needs to be closed (it's not Northern Ireland, where it is just disadvantageous to close the border to London), and then use this trump card in negotiations with the European Union.
We have already talked about problems with Scotland. Scotland wants to secede from the United Kingdom, but received an official refusal from Boris Johnson to hold a second referendum on independence. Now the question remains, what is the Scottish National Party ready to do, led by Nicola Sturgeon, to achieve its goal?
As long as the UK is covered by geopolitical and macroeconomic problems, traders continue to wonder if the Bank of England will accept a rate cut at its next meeting on January 30. The fact is that this meeting will be the last for Mark Carney, respectively, he can follow the example of Mario Draghi and "slam the door" in the end, lowering the key rate. This decision will not come as a surprise to anyone, since the UK economy needs stimulation. But Mark Carney himself repeatedly showed that he wants to leave such a trump card as lowering the rate for the most critical moment ...
The technical picture shows the preservation of the downward trend, at the same time, the pair failed to go below the previous local low. Thus, the correction is likely to begin. Turning the MACD indicator upwards will signal exactly this.
Trading recommendations:
GBP/USD remains downside. Thus, traders are advised to resume sales of the pound/dollar pair with the target of 1.2933, after the correction is completed. It is recommended that purchases of British currency be returned no earlier than the price consolidation above the Kijun-sen and Senkou Span B lines with the first target of 1.3191.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicators window.
Support / Resistance Classic Levels:
Red and gray dashed lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
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