From a comprehensive analysis point of view, we see characteristic impulse candles that closely approach the quotes with a psychological level of 1.3000, but there was already a stop followed by a reverse move near the control value. In fact, half of the decline was already won back yesterday and local oversold, with the close proximity of a key level, played a role in the market. Theories of the future development of the pound differ among traders, some believe that the current swing, with an impressive rebound from historic lows, is a harbinger of a change in the key trend, and this is confirmed by the protracted process of maintaining the existing heights. However, other traders, believe that the situation in the United Kingdom does not bode well and problems in the economy are just beginning,
In terms of volatility, we have a current-saving acceleration, which was set by the market at the end of last year. The emotional component of the market still has a high speculative operations ratio, which cannot be said about strategic participants who hold a waiting position.
Parsing the past minute by minute, we see that the main leap in quotes occurred in the period 07:00 - 08:30 UTC [time on the trading terminal]. Then came the measured recovery process until the end of the day.
As discussed in the previous review, speculators worked precisely on a pulsed path, where the entry was made at around 1.3079, and the first partial exit at 1.3053. The further process of retention of trading operations led speculators to the area of the psychological level of 1.3000, where, against the background of local oversold and disposable level, further positions were fixed.
Considering the trading chart in general terms [the daily period], we see an upward trend in the structure of the global downward trend. At the same time, if we focus on the interval of the last month, then we will see not just a V-shaped oscillation, but a kind of stop, which has its limits and is characterized as lateral movement.
The news background of the past day contains the data on applications for unemployment benefits in the United States, where they expected a total reduction of 34 thousand, and as a result received a rapid increase of 66 thousand [Primary: - 9 thousand; Repeat: 75+ thousand.]
The reaction of the market to statistical data was not in favor of the American dollar, as a result of which we saw the growth of the pound on its general recovery.
If we take a closer look at the trading chart [GBP/USD], we will see that before the statistics there was a significant weakening of the pound. So, the reason for the decline was in a number of factors that intertwined among themselves. The head of the Bank of England Mark finally hinted that in the near future the regulator will still lower the interest rate if weaknesses in the economy are noticed. At the same time, an article was published on the Bloomberg resource with a loud title regarding the strong decline in retail trade among the largest retailers, where they took the news in a negative tone without necessary details.
The result of all the noise is already known to us, the time of the appearance of information almost up to a minute coincides with market leaps.
In terms of the general informational background, we have news that the House of Commons of the British Parliament adopted in the third reading a bill on the country's withdrawal from the European Union, where 330 deputies voted in support of the bill while 231 voted against. The next step goes to the House of Lords, which should consider the bill, and after their approval, the document goes to the signing of Elizabeth II. In fact, the deal has already been approved, and the procedure is a formality.
Today, in terms of the economic calendar, we have the publication of the report of the United States Department of Labor, where, according to preliminary expectations, there may be negative data. So, outside the agricultural sector, 165 thousand new jobs should be created in comparison with 266 thousand in the previous month according to forecasts. The unemployment rate could rise from 3.5% to 3.6%.
The upcoming trading week in terms of the economic calendar is replete with statistical data, inflation indicators in the United States stand out most strongly, where they are expected to slow down.
The most interesting events are displayed below:
Monday, January 13
Great Britain 09:30 UTC - Volume of industrial production (YoY) (November): Prev -1.3%
Tuesday, January 14
USA 13:30 UTC - Inflation: Prev 2.1% ---> Forecast 2.0%
Wednesday, January 15
Great Britain 09:30 UTC - Inflation: Prev 1.5% ---> Forecast 1.4%
USA 13:30 UTC - Producer Price Index (PPI) (YoY) (Dec): Prev 1.1% ---> Forecast 1.3%
Thursday, January 16th
USA 13:30 UTC - Retail sales (dec)
USA 13:30 UTC - Applications for unemployment benefits
Friday, January 17th
United Kingdom 09:30 UTC - Retail sales (dec)
USA 13:30 UTC - The number of issued building permits (Dec)
USA 13:30 UTC - The volume of construction of new houses (Dec)
USA 15:00 UTC - The number of open vacancies in the labor market JOLTS (Nov)
Further development
Analyzing the current trading chart, we see an attempt to return sellers to the market after a short corrective move. In fact, the past recovery movement in some way cooled overheated short positions, and sellers again try to send the quotes towards the psychological level of 1.3000, but can they do it if the statistics for the United States come out in bad tones. Thus, the assumption of local slowdown, with relatively wide boundaries, is considered for this situation as a real path of development.
In terms of volatility, we see holding acceleration, which, of course, pleases speculators.
By detailing the per-minute portion of time, we see that the main fluctuation occurred at the start of the European trading session. Now we have a few pulsing downward candles.
In turn, speculators do not have time to calculate profits, as the past short positions, which have brought impressive income, are again considered as local operations until the release of statistical data on the United States.
Having a general picture of actions, it is possible to say that a hypothetically downward movement may resume if the quotes manage to fix lower than 1.3050, otherwise there may be a chatter. Do not forget that the support in the face of the psychological level of 1.3000 is still maintained in the market and puts pressure on the quotes.
Based on the above information, we derive trading recommendations as follows:
- Buy positions are considered in case of price-fixing higher than 1.3100.
- Sales positions are considered as local, if we do not have operations, then we can consider them lower than 1.3050.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators' indicators still retain downward interest, despite the recent rollback.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(January 10 was built taking into account the time of publication of the article)
The current time volatility is 39 points, which is still a low indicator, but not yet a downfall. It is likely to assume that the speculative mood, coupled with the news background, can still show itself, accelerating the quotes.
Key levels
Resistance zones: 1.3180 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1,3000; 1.2885 *; 1.2770 **; 1.2700 *; 1.2620; 1.2580 *; 1.2500 **; 1.2350 **; 1.2205 (+/- 10p.) *; 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment