4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - up.
The moving average (20; smoothed) - sideways.
CCI: 37.3996
The British pound also adjusted to the moving average line yesterday, could not fall below it and rebounded from this barrier. Thus, the upward movement of the pair may resume, but above the Murray level of "+1/8" - 1.2970, it will still be extremely difficult for bulls to leave without having fundamental support in their arsenal. Even more than that, all the macroeconomic statistics that have recently come from the UK should have lowered the pound by 150-200 points, but this did not happen. Yesterday's Fed minutes can also be called more "bullish" for the US dollar than "bearish". The Fed announced that it's not planning to cut the key rate anymore, but the Bank of England may even do it at the next meeting, as two out of 9 members voted in favor of the need to soften monetary policy last year. Thus, we already have an additional two factors in the fall of the British pound. But market participants are still waiting for the election, waiting for the victory of the conservatives, waiting for Brexit and ignore all other news that would have a very negative impact on the British currency.
Recently, there has been more discussion in the trading community about a possible alliance between the Conservative Party and the Brexit party, which can provide the majority of the first votes and, therefore, enable Boris Johnson to implement Brexit by the end of January 2020. However, we have questioned whether Nigel Farage's party will just take and give potentially 20-50 seats in parliament to the conservatives several times. Simply because it is more likely to implement Brexit according to Boris Johnson's plan. If the Brexit party is not against such an option, then why not just vote "yes" to it when this bill is brought forward by Boris Johnson in parliament? Why give up their seats in parliament? Behind all this, there is a certain form of conspiracy, as well as the figure of Donald Trump, who has repeatedly stated that Johnson and Farage are his friends. However, according to the latest information, the Labor Party and the Liberal Democrats may also join forces to prevent Brexit. The Liberal Democrats are in favor of immediately canceling Brexit without any referendums. Labor is in favor of a second referendum on Brexit, but most importantly, both parties do not support Boris Johnson and his version of the deal with the European Union. Thus, in this case, it is not about giving a few dozen seats in the House of Commons, but about building a coalition to prevent the implementation of Brexit. However, who and with whom will form a coalition is again interesting, but a secondary question, since first you need to understand how the votes will disperse in the elections.
In terms of macroeconomic statistics, a report on public sector net borrowing is expected from the UK today, which is also third-rate, like all reports from the European Union and the United States. Thus, even today, traders will have nothing to react to. However, market participants, in any case, do not pay much attention to macroeconomic reports, and the volatility of the pair remains low. Based on this, macroeconomic data is not important now, political news now does not give any new and important information to traders, but Brexit is put on pause and is also not a provider of interesting data. The technical picture shows a possible resumption of the upward movement, as the pair failed to gain a foothold below the moving average. Both channels of linear regression are still directed upwards, which also supports the bulls.
Nearest support levels:
S1 - 1.2909
S2 - 1.2878
S3 - 1.2848
Nearest resistance levels:
R1 - 1.2939
R2 - 1.2970
R3 - 1.3000
Trading recommendations:
The GBP/USD pair completed the correction near the moving average line. Given the fact that traders are now almost unresponsive to fundamental data, and important economic publications in the UK and the US are not scheduled for this week, the volatility is unlikely to change today. Also, there is a high probability that traders will not overcome the area of 1.2970 - 1.3010. Thus, formally, purchases with targets of 1.2970 and 1.3000 are formally relevant now, but they would recommend that they be extremely cautious about any positions. It will be possible to sell the pair in the case of consolidation below the moving average but also with minimal volumes.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression - the blue line of the unidirectional movement.
The lower channel of linear regression - the purple line of the unidirectional movement.
CCI - the blue line in the regression window of the indicator.
The moving average (20; smoothed) - the blue line on the price chart.
Support and resistance - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
