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It is clear that a rebound should occur after the pound's collapse on Tuesday. The problem is that even a purely technical correction needs some reason. But things are not going well with this. The pound literally stood still throughout the day, which is a clear proof of the market's need for a local correction. The fact is that the final data on business activity indices in the United States turned out to be better than forecasts. In particular, the index of business activity in the service sector fell from 53.4 points to 52.7 points, while a preliminary estimate showed its decline to 51.6 points. The composite index, which was supposed to fall from 53.6 points to 51.2 points, fell only to 52.3 points. And the dollar did not grow, but stood still. So the dollar's growth potential is clearly very limited, and the market is looking for at least some reason for a rebound.
Composite PMI (United States):
But no matter how strange it may sound, it is quite possible for the dollar to further strengthen today. With all due respect to business activity indexes, they have much less weight than employment data, which should increase by 180,000. It increased by 128,000 in the previous month. So we are talking about further improvement in the situation in the labor market. And this is ahead of tomorrow's release of the United States Department of Labor report.
Employment change (United States):
The GBPUSD currency pair, unlike the euro, slowed down the downward cycle, resulting in a stagnation within the deviation of the lower boundary of the psychological level of 1.2000 (1.1950/1.2000/1.2050).
The RSI H4 technical instrument touched the oversold zone locally, which indicated an overheating of short positions and, as a result, a price rollback. RSI D1 is moving in the lower area of the 30/50 indicator, which corresponds to the direction of the main trend.
The moving MA lines on the Alligator H4 and D1 indicators are directed downwards, this signal converges with the trend direction.
On the trading chart of the daily period, there is a recovery of more than 83% of dollar positions from the upward trend of 2020-2021.
Expectations and prospects
The slowdown in the down cycle can be viewed by traders as a realignment of trading forces. In this case, the 1.2000 level area can be won back as resistance, increasing the volume of short positions. It is worth considering that the regrouping of trading forces may take the form of a correction, which is acceptable by the width of the 1.2000 level range.
Comprehensive indicator analysis has a buy signal in the short term due to a rollback. Indicators in the intraday and medium-term periods are focused on a downward trend.
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