From a comprehensive analysis point of view, we see a return to the level of interaction, having a partial recovery process. The week kicked off with an upside gap of 35 points, where the movement at the beginning of the European session was amazing. So, a local jump of two hourly candles brought the quotes to the area of 1.3200, where the bulls could not manage to stay, this resulted in a recovery move with respect to pulsed candles, and after that with respect to all the noise .
Regarding the theory of downward development, for a start, one should not prematurely raise a panic, the external background, which went without exception for all currency pairs, caused a lot of noise, shooting quotes to extreme values. If we are considering only the GBP / USD pair, then in our case the critical levels of the fracture were not affected, and the market panic passed us by. The existing recovery relative to the existing fluctuation is already signaling a price return to the area of the interaction level of 1.3000, which means that the chance of further descent is still high. Now we need to wait a bit for the quote to return back to the range of 1.2770 // 1.2885 // 1.3000 and after that return to the discussion of the theory.
In your analysis, it is worth considering another important point, if there is general panic in the market, then theories, principles, as well as analysis, can take on local disorder in the form of jumps, and in this case, you need to work on top of your main tactics, that is, on a wave of noise. As you know, this method is not suitable for everyone, and if you are not ready to jump at the races, it is better to sit outside the market.
In terms of volatility, we see consistently high indicators, confirming market acceleration, as well as speculative market sentiment. The activity of the past day exceeds the daily average by 66%.
Details of volatility: Tuesday - Friday - 193 points; Monday - 110 points; Tuesday - 102 points; Wednesday - 102 points; Thursday - 107 points; Friday - 103 points; Monday - 165 points. The average daily indicator, relative to the dynamics of volatility is 99 points [see table of volatility at the end of the article].
Detailing the day by minute, we see the same gap in the open market, after which a small pullback towards the gap and the main surge at the start of the European session at 05:30 - 06:00 UTC. The subsequent fluctuation in the period 07:00 - 09:30 UTC was in the opposite direction, playing out almost the entire morning surge.
As discussed in the previous review, intraday traders initially had local long buy positions, but I think that with such activity, the positions were prolonged.
Considering the trading chart in general terms [the daily period], the first thing we see is the significant acceleration that stands out relative to the periods earlier. The growth rate is several times faster than the decrease, which gives an overheat signal, it is also worth considering that a similar picture will be encountered when parsing alternative currency pairs. Thus, we have a kind of panic, expressed in speculative leaps.
The news background of the past day did not have the attention of statistics on Britain and the United States, but it was not needed when we have such a strong external background.
In terms of the general information background, we had a market reaction to the collapse of oil prices by more than 30%. This happened against the background of the lack of OPEC + agreement to further reduce oil production. This background went without exception for everyone, defeating the market in panic leaps, as it was for the GBP / USD pair.
As you know, this news was the main one in terms of drive, and against the background were discussions of Brexit, where, according to preliminary estimates, the UK government spent more than $ 5 billion to prepare for the country exit from the EU. In turn, the existing negotiations on trade interactions after Brexit switched to the second phase, where Michel Barnier, the EU's main negotiator, is concerned about the possible complication of the process due to the difficult issue of access to Britannia's aquatic biological resources.
Finally, on March 9, a representative of the British Prime Minister said during the market crash issue that the Bank of England made it clear that it would take all necessary steps to protect financial and monetary stability.
Today, in terms of the economic calendar, we again have no worthwhile statistics on Britain and the United States, thus we should focus on the background, as well as on the technical component.
Further development
Analyzing the current trading chart, we see a slight rebound from the level of 1.3000, where the quotes failed to reach just 16 points. In fact, now we are oscillating inside the gap, where the quotes probe the available coordinates for strength. Due to the unstable situation on the market, it is worthwhile to carefully analyze the background, as well as the dynamics of fluctuations of other instruments, for example, the EUR / USD pair. The main strategy is still downward development, but to begin with, the quotes needs to consolidate below the level of 1.3000 in order to return to the initial fluctuation within the range of 1.2770 // 1.2885 // 1.3000.
From an emotional mood point of view, we see that at night there was a strong downward movement that led the quotes in the area of 1,3016. At the start of the European session, there was a local jump in the opposite direction, but it literally did not change anything.
By detailing the time interval we have, we see that the night slowdown of 1.2945 / 1.2967 was broken with the arrival of Europeans on the market, but activity is still low.
In turn, intraday traders are now more focused on price hikes than on basic steps. Thus, the framework: 1.3090 - purchase; 1.3045 - Sales are now considered as departure points to local positions.
Having a general picture of actions, we see that general noise puts pressure on traders where speculators crawl out, and in such a development it is better to work on the beat with noise or not work at all. Thus, the main downward development is postponed until the quotes return to 1.2770 // 1.2885 // 1.3000. Now trading is carried out relative to local leaps.
Based on the above information, we derive trading recommendations as follows:
- Local purchase positions are considered higher than 1.3090, towards 1.3135.
- Local sales positions are considered lower than 1.3045, towards 1.3000.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments occupy the upward side due to the general market background. It is worth considering that now the minute and hour intervals are unstable and the signal can be changeable.
Volatility per week / Measurement of volatility: Month; Quarter Year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(March 10 was built taking into account the time of publication of the article)
The current time volatility is 98 points, which is already an average daily indicator. It is likely to assume that the market will not stop there and we will again see excesses of the average daily value.
Key levels
Resistance zones: 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1,3000; 1.2885 *; 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
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
