Using complex analysis, we can see a surge of speculative activity, which brought the quote out of the boundaries of stagnation.

As we can see, the past trading day was interrupted by a looping process of fluctuation along the variable level of 1.2500. There, the quote stood in a narrow range for more than 80 hours, during which the low activity was replaced by a surge in speculative positions. It led to a breakout from the high 1.2540 and a jump to the value of 1.2590.

During the entire process of fluctuation, the most worrying thing is the overcoming of quotes of the previous correction's high at the level of 1.2540. The change indicated the formation of an oblong correction, which could change the current market tact. If we talk about the limits of the previous range which is 1.2150 // 1.2350 // 1.2620, the existing fluctuation does not upset the balance of the cycles, and a similar movement from the value of 1.2250 has already occurred on the market on April 21 , during which the quotes returned to the level of 1.2620.

Thus, with regards to trading approaches, we recommended adhering to the strategy of local operations, which is the most suitable strategy for market behavior during an unstable external background, on the basis of which speculative activity arises.

Analyzing the past trading day in detail, we can see that the round of long positions arose from 10:30 to 16:00 (UTC + 1), during which there was a rollback of about 42%, relative to having a surge.

Hence, volatility accelerated by 138% relative to the record on Monday, and 10% relative to the average daily value. Such data is expected due to a sharp decline in activity in the period of 80 hours.

Meanwhile, analyzing the trading chart in general terms (daily period), it is clear that the quote is still under a correction, which starts at the level of 1.2250. Recovery has not occurred for 6 trading days.

The news published yesterday included the recent data in JOLTS, in which the previous figures were revised for the worse from 5,046 thousand to 4,996 thousand. Nevertheless, the current data came out better than the forecast of 4,500 thousand to 5 397 thousand

Market reaction to the data was in favor of the US dollar.

As for the UK and the EU, Prime Minister Boris Johnson gave a mirror response to the statement of German Chancellor Angel Merkel. According to them, both parties need to prepare for the fact that there might not be a trade deal on Brexit. Johnson noted that the UK is ready to do without an agreement, if the EU does not compromise.

At the same time, Johnson stressed that the UK is working hard on an agreement and finding compromises, but if there are no results, they are ready to leave the European Union on the terms of Australia, that is, without a deal.

As a result, the European Commission published forecasts for GDP, based on which the UK economy will contract by 9.7% this year due to the pandemic and Brexit.

Today, there are no important statistics that would significantly change the dynamics of the GBP / USD pair. Thus, the market will likely focus on external news, as well as reactions related to Brexit

Further development

Analyzing the current trading chart, we can see that the quotes temporarily stayed within the levels 1.2535 / 1.2565, which occurred during the recovery of short positions through the recent price fluctuation. If we proceed from the theory of fluctuations within the range of 1.2150 // 1.2350 // 1.2620, there is a chance that the quote will reach the resistance level1.2590, which means that short positions will again become relevant.

In addition, the disagreement of parties with regards to Brexit may put additional pressure on the pound.

As for market sentiment, another surge in speculative positions may still occur.

Thus, the fluctuation within the levels 1.2535 / 1.2565 will not last long, at which if the quotes consolidate lower than 1.2535, the pair could easily move towards the values 1.2500-1.2480.

But an alternative scenario will occur, if the quotes reach the level of 1.2620, and then consolidate higher than 1.2570 before going to the limit 1.2620.

Indicator analysis

Analyzing the different sectors of time frames (TF), we can see that the indicators of technical instruments in the hourly and daily periods signal buy due to the upward movement and consolidation above 1.2550.

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

The measurement of volatility reflects the average daily fluctuation, calculated by Month / Quarter / Year.

(July 8 was built, taking into account the time the article is published)

The volatility at this current time is 30 points, which is 74% lower than the daily average. It is assumed that if the quotes breakout of the range 1.2535 / 1.2565, another surge in activity will be observed.

Key levels

Resistance Zones: 1.2620; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Areas: 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

**** The article is built on the principle of conducting a transaction, with daily adjustments