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15.11.2019 03:00 PM
Trading recommendations for the GBPUSD currency pair – prospects for further movement

The slowdown of several days has formed a certain platform, what it can lead to, is it worth waiting for the breakdown of the control level or we will continue to move in the established flat – you will find answers to these and many other questions in the article.

From the point of view of technical analysis, we see that for the fourth day, the quote is moving in a narrow range, where the upper border displays the middle (1.2885) of the main flat formation (1.2770/1.3000), and the lower frame (1.2815) – the formed circle relative to the current fluctuations. The characteristic restraint of the quote gives rise to speculation, is this slowdown a platform for starting? That is, earlier we have already seen a local convergence with the range level (1.2750/1.2770/1.2800), where the quotation managed to bounce only due to the spontaneous information background (November 11), but, as we can see from the result, the desire to keep the upward momentum was not supported by market participants, and the very stagnation in the form of a platform was formed. The trading platform, in this case, serves as a variable range where trading forces are aligned and, based on the subsequent accumulation of one or another interest, acceleration can occur, which, as a fact, will lead to a breakdown of the strongest market value. What am I leading to, if the momentum (November 11) was not the point of working off the level of 1.2770 and served only as a local jump, while maintaining a downward mood, then this platform can work out in terms of acceleration and as a fact of the breakdown of the control level of 1.2770. I perfectly understand that the above material is one of the development theories, but when you look at the dynamics of the volatility of the last 15 trading days, you somehow think spontaneously but is it time to go for a breakdown and accelerate. (Dynamics of daily candles from High to Low: 58 – 65 – 97 – 62 – 75 – 45 – 67 – 58 – 53 – 83 – 53 – 118 – 58 – 40 – 63 points).

Analyzing the hourly past day, we see that the primary oscillation was within 1.2815/1.2865, where there was a local leap between 17:00-18:00 hours (time on the trading terminal), which did not lead to something drastic in terms of movement but the accumulation frame moved to the initial point of 1.2885 (50% relative to the flat of 1.2770/1.3000). The subsequent oscillation was within the value of 1.2885, with an amplitude of about 12 points.

As discussed in the previous review, some traders continue to hold short positions from November 12, hoping that the range level of 1.2770 will still succumb to the onslaught of the market. It is worth considering that entering the market on November 12 carried a risk, for this reason, money management was carefully selected, without unnecessary trading volumes. At the same time, other traders worked both on the decline and the increase, focusing on the coordinates of 1.2750 – sell and 1.2885 – buy, but not one of the coordinates was not broken.

Looking at the trading chart in general terms (daily period), we see all the same oscillation of 1.2770/1.3000, where the price concentration is in the 50% deviation of 1.2885. Let me remind you that the fluctuation between price levels lasts for a month, which, in turn, concentrates the increased interest in the subsequent development. In terms of recovery relative to the entire course of the historical minimum, we have some 22%, which is extremely small, especially for the month.

The news background of the past day had in itself the data on retail sales in Britain, where they expected acceleration from 3.1% to 3.7%, but as a result, they received the same figure of 3.1%, which, to put it mildly, is bad. Then came the data on producer prices in the United States, where they predicted a decline from 1.4% to 0.9%, but as a result, they got better data – 1.1%. The latest data came out on applications for unemployment benefits (USA), which increased insignificantly, by 4 thousand: Primary +14; Repeated -10 thousand.

The market reaction to the statistical indicators was again beyond logic as if the market lives its own life, and the composition of statistical data, which could help to strengthen the dollar (USD), is ignored by the market.

The information background daily is full of the election race in the United Kingdom, where so far the Labor leader promises everyone free internet, citing the fact that only 8-10% of homes in the UK are connected to fiber optics, the business "nervously smokes on the sidelines." Investors in Britain are already experiencing bad times due to the protracted Brexit divorce process, as well as the "communist" in the person of Jeremy Corbyn threatens to impose high taxes on the rich and nationalize the railways, energy and water companies, as well as the royal mail. Bloomberg analysts tried to conduct a survey among bankers and hedge funds on the topic of the current election, but in response received reluctant comments that reflected some kind of concerns.

"If Corbyn wins, it will be a fundamental change to everything we have had in this country for so many years," John elder said, founding partner of Family Office Advisors LLP.

In turn, Prime Minister Boris Johnson recalled that, in addition to the elections, there is also Brexit, but said that there is still a wagon of time to conclude a deal with the EU.

"Yes, we can do this, we will leave the European Union in January, and we will have a wagon of time to establish a free trade partnership. The huge advantage is that we have a high degree of consistency of tariffs, quotas, standards, so a deal with the EU will not be like any other deal," Boris Johnson said.

Today, in terms of the economic calendar, we have data on retail sales in the United States, where they predict a slowdown from 4.1% to 3.8%. At the same time, statistical data on industrial production in the States will be published, where the decline should accelerate from -0.1 to -0.4.

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The upcoming trading week in terms of the economic calendar, the only thing that stands out is the minutes of the Fed meeting. In the UK, significant statistics by weight is not expected, thereby all hope remains on the spontaneous information background, which periodically pleases speculators.

The most interesting events displayed below:

On Tuesday, November 19th

USA 14:30 London time – Number of building permits issued (October): Prev 1.391M – Forecast 1.385M

USA 14:30 London time – The volume of construction of new houses (October): Prev. 1.256M – Forecast 1.300M

On Wednesday, November 20th

United Kindom – Monetary Policy Committee Hearings

20:00 London time – Protocol of the meeting of the US Federal Open Market Committee

On Thursday, November 21st

USA 14:30 London time – Sales in the secondary housing market (October): Prev 5.38M – Forecast 5.43M

On Friday, November 22nd

USA 15:45 London time – The composite purchasing managers' index (PMI) from Markit (November)

Further development

Analyzing the current trading chart, we see a stagnation, where the basis is taken the level of 1.2885, which plays the role of the upper bar. There was a kind of compression (1.2865/1.2885) in the accumulation stage of 1.2815/1.2885. In terms of volatility, we have extremely weak values, as if there is no movement at the root, as well as incoming trading volumes, but this again seems to be a stage of a kind of readiness for action.

By detailing the per minute movement, we see a horizontal move with an attempt to gain a foothold below, but more notably, a set of candles from the beginning of the day signals a clear ambiguity in terms of action.

In turn, some traders continue to hold positions for sale, with a conservative trading volume. Another part of traders is looking at the coordinate of 1.2885 for clear fixations above it.

Having a general picture of actions, it is possible to assume that if we judge not narrowly, then by all signals and background, the pound is entitled to resume the downward course with a priority point in the face of the range level (1.2750/1.2770/1.2800). The main trading volumes will be lower than 1.2750 after the price is fixed. At the same time, there is an active discussion of the area of 1.2885/1.2900, wherein the case of its flight, market interests may change, and the cycle of 1.2770/1.3000 will resume again.

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Based on the above information, we derive trading recommendations:

  • Buy positions are considered in the region of 1.2885/1.2900.
  • Sale positions are already available for some traders and are being led towards 1.2800/1.2770. A deeper move will be considered after fixing the price lower than 1.2750.

Indicator analysis

Analyzing different sector timeframes (TF), we see that the indicators unanimously signal an upward interest, but there is one "but". Short-term gaps operate on a narrow accumulation, and the tap signal is unstable. The intraday outlook was replaced by yesterday's jump, which has no explanation. The medium-term outlook is more neutral than upward.

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Volatility per week / Measurement of volatility: Month; Quarter; Year.

Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.

(November 15 was built taking into account the time of publication of the article)

The volatility of the current time is 20 points, which is not just a low value for a given period, but damn low. In these situations, I want to work more on local jumps, the direction does not matter since there is nothing to surge in activity on. For those who wish to speculate, with short-term operations, the moment has come, monitor the existing accumulation (of the current day).

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Key levels

Resistance zones: 1.3000; 1.3170**; 1.3300**.

Support zones: 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 based on the principle of conducting transactions, with daily adjustments.

Gven Podolsky,
Analytical expert of InstaForex
© 2007-2024
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