The past trading week passed along a familiar trajectory: from a price level of 1.3000 ---> 1.3170 ---> 1.3000, but such did not bring cardinal changes to the market. Nonetheless, a distinct sideways movement occurred, which was already expected by the market participants two weeks earlier. Thus, the quote first crossed the psychological level of 1.3000, the average level in the price range 1.2770 // 1.3000 // 1.3300. The movement within the levels 1.3000 / 1.3200 signals accumulation, which serves as a regrouping of trading forces, as well as weakening of the overbought stage of the pound after a rapid rise in its value. It is not sure yet if this will become a catalyst for the downward movement, but such will be clear after the quote consolidates lower than 1.2950. If not, the quote will rise further in the upper limit of the range 1.
But looking at the situation of the US dollar in the Forex market, we can see that the EUR / USD pair, which has a high degree of positive correlation with the GBP / USD, is trying to go into a correction, forming a primary flat in the market. If such really occurs, in which the European currency declines in the market, the current convergence of quotes with the level of 1.3000 may mean the desire of sellers to move the pound to the lower part of the price range 1.2770 // 1.3000 // 1.3300 ...
If we recall the trading last Friday and analyze it by minutes, we can see that the main surge in short positions came at 14: 00-15: 15, during which a convergence with the level of 1.3000 was recorded.
This is because as discussed in the previous review , already expected the price to move to the price level of 1.3000 level, with which the main hunt for a corrective move emerged around 1.2950.
Thus, in the daily TF, we can see a high similarity with the dynamics of fluctuations at the beginning of the year, where there was a similar focus in the area of 1.3000 / 1.3250.
Meanwhile, the news published last Friday included the report of the US Department of Labor, where a decrease in unemployment from 11.1% to 10.2% was recorded. Data on non-farms also grew to 1,763,000, instead of the forecast of 1,620,000.
Such figures became the impetus for the rise of the US dollar.
Today, data on JOLTS will be published, the forecast for which is a decline from 5,397,000 to 4,900,000.
Further development
Analyzing the current trading chart, we can see that after a slight pullback during the Asian session, a flow of short positions reappeared, which returned the quote near the psychological level of 1.3000 (1.2950 // 1.3000 / 1.3050). Maintaining the price at these values plays into the hands of sellers, who aim to pass the price level of 1.2950, as such will result in a shift of the current fluctuation, in an amplitude of 1.2770 / 1.3000.
But in case of a price jump, hold the quotes in the range 1.3000 / 1.3200 (1.3250).
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators of technical instruments in the minute and hourly periods signal "sell" due to the quote nearing the price level of 1.3000. Meanwhile the daily period, as before, signals "Buy", due to the general movement, but if the quote consolidates below 1.2950, everything may change.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year.
(August 10's was built, taking into account the time this article is published)
Volatility is currently 35 points, which is 68% below the average daily value. Such a low figure indicates the readiness of speculators to take action, which may subsequent increase volatility.
Key levels
Resistance zones: 1.3200 (1.3250) **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Zones: 1.3000; 1.2885 *; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.
* Periodic level
** Range level
*** Psychological level
Also check the brief trading recommendations for the EUR / USD and GBP / USD pairs here .
