For the past few days, the pound sterling showed activity of more than 300 points while the dynamics was both in a downward and upward trend movement.
The downward activity followed the market in the first half of the day caused by a number of negative factors during the weekend. We are talking about stalled trade negotiations and a new strain of coronavirus in Britain.
The upward movement of 307 points is caused by expectations of a positive outcome of the trade deal in the last minutes of December. So, following the information flow, there were rumors that the parties are ready to make mutual compromises, in particular, we are talking about the fact that Europe can reduce the requirements for the volume of fishing in British waters. In turn, the UK is ready to make concessions on other key issues of the deal.
The specifics are close to zero as always, but if we proceed again from rumors, then Europe is ready to reduce the volume by 25%.
The UK sees control of its fishing waters, which were previously under EU jurisdiction as a key element of the sovereignty that they are regaining with Brexit. For its part, Europe does not want to grant access to its single market without retaining the right to fish in return.
Boris Johnson said at the press conference in London that he spoke on Monday with French President Emmanuel Macron but he discussed the coronavirus crisis not Brexit.
"It is very important that everyone understands that the UK should be able to fully control its own laws and we should also be able to control our own fisheries," the British Prime Minister said.
Johnson reiterated that even if the UK could not make a deal and would trade tariffs and quotas with the EU, the agreement would be more than satisfactory.
It's all a play on words and nothing more.
If you can remember, France is one of those countries for which the issue of fishing was key, the phone conversation was not limited to the coronavirus.
On the expectations of an early settlement of the trade agreement, the speculators bought the pound sterling without thinking about anything, but you should be careful with emotions, since there are no clear statements about progress in Brexit yet.
Analyzing the trading chart of the past days, the first thing that catches your eye is the price gap, the scale of which is 119 points. An inertial downward move of 250 points was triggered relative to it. All this was expected in the period of last Friday, where I advised to look closely at the information flow during the weekend, which will set the movement for Monday. In fact, we partially repeated the plot on December 14, and it was possible to earn money here without too much effort.
The upward movement as described above is associated with positive expectations of speculators regarding the trade deal. It was just necessary to track the information flow here as news with these rumors appeared in the media closer to the start of the American session.
As for the price levels, you can pay attention to the fact that the price gap of December 14 became the fulcrum of the past day.
The market dynamics for December 21 was 307 points, which is 133% higher than the average level. The last time such a high level of volatility was observed in the market was during the March collapse.
Looking at the trading chart on the scale of the daily period, you can see a medium-term upward trend, which is in the structure of a long-term downward trend.
Today, in terms of the economic calendar, we published the final data on UK GDP for the third quarter, where the rate of economic decline slowed from -21.5% to -8.6%, while waiting for a slowdown to -9.6%, which is quite good.
There was no market reaction to the statistics.
The final GDP figure for the United States for the third quarter will be published in the afternoon where they expect that the pace of economic decline will slow from -9.0% to -2.9%. The forecast coincides with the preliminary estimate, which means that if the data match, then you should not expect a reaction in the market.
The flow of information remains the main tool of speculators. Traders are waiting for specifics and new rumors about possible compromises between Britain and Europe on key issues. In fact, this is the only tool for influencing long positions that can grow in volume. It will be interesting to hear if there is information to the contrary, for example, that once again there are no agreements and key issues regarding competition and access to British waters are still not resolved. In this case, we will return to the base point of the previous day.
Do not forget to follow the tactics of monitoring information noise, it has already brought us a lot of profit.
Positive news on Brexit leads to the strengthening of the pound sterling
Negative news on Brexit leads to a weakening of the pound sterling
All information can be extracted from our website - the Analytics section, as well as directly from the media, such as Bloomberg, Wall Street Journal, Reuters.
Upon analyzing a different sector of timeframes (TF), it is clear that the indicators of technical instruments at minute and hour intervals signals a sale due to the reverse course of the quote. The daily period is in a neutral phase due to intense fluctuations in recent times. If we proceed from the medium-term trend, then the signal is ascending.
Volatility for the week / Volatility Measurement: Month; Quarter; Year
The measurement of volatility reflects the average daily fluctuation based on the calculation for the Month / Quarter / Year.
(December 22 was based on the time of publication of the article)
The dynamics of the current time is 106 points, which is already very good. The dynamics will continue to grow but the main round of acceleration will occur when a new portion of information on Brexit is received.
Resistance zones: 1,3650**; 1,3850; 1,4000***; 1,4350**.
Support areas: 1,3300**; 1,3000***; 1,2840/1,2860/1,2885; 1,2770**; 1,2620; 1,2500; 1,2350**; 1,2250; 1,2150**; 1,2000*** (1,1957).
* Periodic level
** Range level