The pound / dollar currency pair remains stably high volatility [137 points] as a result of having a rather interesting denouement. From the point of view of technical analysis [TA], we see that the psychological level of 1.3000 still manages to restrain the onslaught of customers, but for how long it will last, it remains a question. In fact, we have the second day in a row, where the quotation showing synchronous volatility of 137 points and the surgical testing of the resistance level of 1.3000. The price behaves quite predictably when it approaches the level of 1.3000, but if we look at it from the other side, the question creeps up, why are we still so high? - and why indeed. From a technical point of view, we have a huge overbought pound sterling, with an almost vertical movement and psychological level of 1.3000, which in this case could play a platform for a sharp recovery of quotes. The judgment in terms of TA is to some extent true, but it also has its drawbacks, so there are unaccounted for multiple factors, such as the information background, and emotional, which have made their integral contribution to the formation of this move. Thus, the restraint of sellers in terms of speedy recovery and development of the level of 1.3000 carries a complex of factors outlined above.
Analyzing the past hourly hour, we see a sharp impulse oscillation, which arrived at 18:00 [UTC+00 time on the trading terminal]. In fact, a fleeting wobble of 122 points was received and directed downward. The subsequent movement was in terms of continued inertia, but with low volatility.
As discussed in the previous review, speculators worked according to the method of breaking down the previously indicated boundaries of 1.2950 / 1.3000, reveals not only price fixing, but also such moments as an auxiliary background in a compartment with an inertial move. The result of which, profit on the breakdown impulse in the region of 50-70 points.
Considering the trading chart in general terms [the daily period], we see an attempt to slow down the emotional-inertial course, where the psychological level of 1.3000 serves as a stumbling block, which in this case plays the role of resistance. Thus, the 800-point move come to an end and everyone finally got out of the emotional sentiment, which I don't think the end is more like a stop. How are things with the market cycles? It's not all that simple, since an oblong correction from the point of view of technical analysis is a broken new trend, and the clock basis of the past trend has been knocked down. Thus, we are faced with an ambiguous opinion regarding the global steps of the market, where I would recommend to wait a pause for the formation of the cycle and while working on the existing fluctuations [work inside the day, or around a few days]
The news background of the past day contained data on sales on the secondary housing market in the United States for September, where they expected a slowdown of -0.7, but as a result, it received an even stronger decrease by -2.2%. There was practically no reaction to the statistics, due to the strong informational background, which simply overshadowed the entire news flow.
So what happened this time in the vast divorce proceedings of Brexit?
The British Parliament dealt a crushing blow once again to Prime Minister Boris Johnson. Due to this, the three-day meeting that started yesterday regarding Brexit did not start, as it had already ended. The House of Commons with a large number of votes [322 and 308] rejected the government's proposal to urgently adopt an agreement on the UK's withdrawal from the European Union. Whether this certain revenge of the British deputies was just common sense, time will tell, although Boris Johnson immediately responded to such a move by the deputies in the form of a suspension of consideration of the Brexit bill in parliament and the threat of general elections.
"I have to express my disappointment at the fact that the House of Commons voted for a postponement, and not for a schedule that would guarantee that the UK leaves the EU on December 31 with an agreement. Now, we are again in limbo." added Boris Johnson.
In response to Johnson, Labor leader Jeremy Corbyn gave his comments, who called on the Prime Minister to call for cooperation.
"... in order to agree on an acceptable schedule of debate on the Brexit deal, so that deputies can study it in detail and make amendments. This would be a significant step forward. This is the proposal I am making on behalf of the opposition tonight "- head of Labor
Naturally, against such a non-rosy background, the pound sterling rushed downward depicting the very downward impulse, as described above. If we compare the information background and exchange rate fluctuations in more detail, then we will see that the primary fluctuation of the quotation was upward, and after that downward. Thus, before the House of Commons rejected the accelerated schedule, a historic moment occurred in the Brexit process, MPs voted for the first time for a draft agreement on the country's exit from the EU. 329 deputies spoke out in favor of adopting the law on ratification of the agreement in an intermediate second reading, against 299. Moreover, the pound sterling flew locally to the psychological level of 1.3000, but after that, we got a second vote, which puts everything in its place places.
Today, in terms of the economic calendar, we do not have statistics on Britain and the United States again, thereby discussing the divorce process will become a key background for market participants.
Further development
Analyzing the current trading chart, we see a slight pullback relative to the downward impulse course of the past day. The ambiguity in terms of further actions is clearly present in the market and reflects the existing fluctuation.
By detailing the current fluctuations per minute, we see that the pullback process began in the period 03:12-10: 00 [UTC+00 time on the trading terminal]. With the release of the Europeans, local up / down surges occurred.
In turn, speculators have already made a partial and complete fixation of the previously obtained nailed from short positions. Now, the task is to either re-enter [topping up] in short positions or to limit existing deals with an alternative to local reversal and a move in the direction of 1.3000. That is, as you know, the work is carried out immediately on two fronts [Buy & Sell].
It is possible to assume that recovery and, as a matter of fact, a full-fledged development of the psychological level of 1.3000 is still possible and is considered by traders as one of the scenarios, with the prospect of a move to the subsequent value of 1.2770. The alternative is considered in terms of ambiguous information background, where a temporary horizontal movement is formed within 1.2840 / 1.3000.
Due to the fact that the emotional mood of market participants is extremely high, the tactics of monitoring news feeds regarding information regarding Brexit are still in place.
Based on the above information, we concretize trading recommendations:
- Buy positions are considered in the case of price fixing higher than 1.2905, with a move towards 1.2980-1.3000.
- If we already have sell positions, we should not forget about Stop Loss restrictive orders, with the prospect of progress to the level of 1.2770.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators for the short and intraday period are concentrated at the recovery stage, signaling sales. The medium-term outlook, in turn, maintains an upward trend due to the main inertial course.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 23 was built taking into account the time of publication of the article)
The volatility of the current time is 58 points, which is the average for this time section. It is likely to assume that due to a rather strong emotionally informative background, volatility will remain at a high level.
Key levels
Resistance Zones: 1.3000; 1.3170 **; 1.3300 **.
Support areas: 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
*** The article is built on the principle of conducting a transaction, with daily adjustment
