From a comprehensive analysis point of view, we see an insignificant pullback from the psychological level of 1.3000, where, as early as January 9 the quote initially found a foothold. In fact, on January 10, the bulls' indecision reflected the actions where the quotes with a sluggish amplitude moved from the rollback phase to stagnation-recovery, which plays into the hands of potential sellers. Seeing everything that is happening, traders are more and more inclined to further decrease, and the control level of 1.3000 is already being considered from a different perspective, as it was in the autumn period of last year.
In terms of volatility, as noted earlier, a local slowdown to 53 points was recorded which in relation to the dynamics of January we have a decrease of 52%. At the same time, speculative interest is still maintained in the market, as evidenced by the structure of candles and trading volumes.
Analyzing the past minute by minute, we see that almost all of the interest was directed to a decrease, and the average amplitude of the hourly candlestick was 14 points.
As discussed in a previous review, speculators mostly work with short positions, and they do pretty well. In fact, this tactic was set in early January, where the next round of downward operations was born, with variable points of regrouping of trading forces.
Considering the trading chart in general terms [the daily period], we see another attempt to return sellers to the market after the quotes reached a one and a half year high of 1.3513. It is worth considering that the global trend is still downward, in the structure of which, there was an upward trend in the second half of last year.
Friday's news background included the publication of a report by the United States Department of Labor, where forecasts of negative development were confirmed. So, 145 thousand new jobs were created outside the agricultural sector with a forecast of 165 thousand, while the previous period had 256 thousand. At the same time, the unemployment rate, which according to forecasts was supposed to grow to 3.6%, remained unchanged. This is 3.5% which played into the hands of the American dollar.
Market reaction to the publication of the report was negligible. So, considering the trading chart, we see that at 13:30 UTC there was a sharp jump up, just against the background of a decrease in new jobs, but by 13:35 UTC, the reverse process had already occurred a 100% recovery.
In terms of the general informational background, we have a variable discussion of the recently adopted bill on Britain's secession from the European Union. So, Irish Foreign Minister Simon Coveney believes that as soon as the transition period begins, the EU will not rush to trade agreement, as they intend to make the agreement the most optimal, of course, for themselves. At the same time, experts from Bloomberg have already concluded that economic losses to the United Kingdom since the beginning of Brexit have already reached $170 billion, and by the end of the year, they can grow by another 50%. If we switch to the British labor market we will see that the number of jobs has catastrophically decreased last year, vacancies decreased by 59,000, which took place after the financial crisis in 2009. Now we understand when a wide range of experts portends hard times for the UK economy and the pound sterling.
Today, in terms of the economic calendar, we have published data on industrial production in the UK, where the decline can accelerate from -1.3% to -1.4%, which will put pressure on the pound.
Further development
Analyzing the current trading chart, we see that the quote is rapidly storming the psychological level of 1.3000, drawing out impulsive descending candles. In fact, last week's minimum fell to 1.012, and against this background, acceleration is seen which gives sellers strength in breaking the control value.
In terms of volatility, we see signals of possible acceleration, as evidenced by an increase in the rate of speculative operations.
By detailing the per-minute time span, that at the start of the European trading session, impulsive downward jumps began to appear which to this day remain on the market.
In turn, speculators continue to work on the decline. In this case, work is being done on the breakdown level of 1.3000, and in the case of confirmation, the decline may continue.
Having a general picture of actions, it is possible to assume that the ambiguous chatter at the level of 1.3000 may still remain on the market for some time. However, in this case, the main move will be revealed as to which is worth paying attention to. That is, if the quotes still manage to stay below the psychological level of 1.3000 and go down to the area of 1.2980, then the chance of a further decline will increase significantly.
Based on the above information, we derive trading recommendations as follows:
- Buy positions are considered in case of price-fixing higher than 1.3015.
- Sales positions are considered in case of price-fixing lower than 1.2980.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators unanimously signal sales, which is confirmed by the general market interest.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(January 13 was built taking into account the time of publication of the article)
The volatility of the current time is 71 points, which is already pretty good for the morning time. It is likely to assume that if it is still possible to break through the psychological level and at the same time increase from it, then volatility can safely exceed the average.
Key levels
Resistance zones: 1.3180 **; 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
