The GBP / USD pair showed very high activity yesterday, as a result of which the quote was able to move below the psychological level of 1.3000. However, market participants weren't able to stay below this control level, thus, the quote returned to the psychological value, as if nothing had happened.
If we look at the four-hour chart in terms of the recovery process, all is not lost for the sellers. The downward trend, which started last week, consistently updates local lows, which may well lead to huge price jumps. However, it requires stability and consolidation points.
Keeping the price below 1.3000 will provide a definite marker for sellers, as such will determine the next step, for example, movement towards the level of 1.1860, where the area of interaction of trade forces is located. The breakdown of 1.1860 will lead to an even larger surge of short positions, which will jeopardize the main local low, that is, 1.2674.
So, if we analyze the M15 chart, we will see that short positions arose from 07:15 and lasted until 12:30, during which the GBP / USD pair moved down in the market, but then returned to 1.3000 afterwards.
As a result, a dynamics of 146 points was recorded, which is 21% higher than the average level. Nonetheless, this figure was already expected, mainly due to the characteristic slowdown observed in the last four trading days. Moreover, speculative positions were abundant, indicated by the huge price jumps in the market.
In addition, the development in the pair was already predicted in the previous review , where it was said that a consolidation below 1.2990 will lead to the build-up of short positions.
And, if we look at the trading chart in general terms (daily period), we will see that 1.3175 became a conditional peak, relative to which the recovery process arose.
With regards to news, updates on the coronavirus and Brexit became a lever for speculators.
In recent months, the world has observed another surge in COVID-19 cases, as a result, many states including Britain implemented appropriate quarantine measures. However, it seems that they are not enough to stop such a terrifying increase in infections, thus, Europe is moving to tough measures, in which a number of countries have already announced the closure of bars, restaurants, cafes, fitness centers, as well as entertainment establishments. In the United Kingdom, there is a three-tier control system which depends on the epidemiological situation. But there are rumors that Boris Johnson is considering a full-scale quarantine if the terrible situation with COVID-19 does not cease.
As for Brexit, there are talks that David Frost and Michel Barnier finally found a common ground and are now working on the text of an agreement on equal competitive conditions. It was said that the two are close to completing a joint document.
Although these news have many questions and unconfirmed moments, it was enough for a speculative leap in favor of strengthening the British pound
In terms of economic reports, data on the UK's lending market is scheduled for release today, and on it, economists predict that the volume of mortgage and consumer lending will grow, while approved mortgage loans will decline.
As for weekly data on jobless claims in the United States, which is also scheduled to be published today, economists predict a decrease in volume, which will positively affect the US dollar. Repeated applications are expected to decrease from 8,373,000 to 7,900,000, while initial applications are expected to drop from 787,000 to 750,000.
Aside from that, an estimate of the US GDP for the third quarter will also come out, that is, an economic growth of about 30%.
As we can see on the daily chart, price fluctuated at 1.3000, during which the bears attempted to get ahold of the market. Holding the price below 1.3000 will increase the chances of a subsequent downward development towards 1.2910-1.2860, but the main signal of the downward trend is the breakdown of the range 1.2840 / 1.2860
Looking at the different sectors of time frames (TF), we can see that the indicators on the minute and hourly periods signal SELL due to the quotes being below 1.3000. As for the daily period, the signal changed from BUY to SELL because of the downward movement that occurred yesterday.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.
(The dynamics for today is calculated, all while taking into account the time this article is published)
Volatility is currently at 44 points, which is even lower than the average level by 63%.
Nevertheless, there is a high chance that the market will see an acceleration soon.
Resistance zones: 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Zones: 1.3000 ***; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).
* Periodic level
** Range level
*** Psychological level