The pound/dollar currency pair showed low volatility of 69 points for the last trading day, as a result of which there was a process of accumulation. From technical analysis, we see that the breakdown of the level of 1.2350 led to a distinct accumulation below it, where the local low of September 12 serves as the lower limit, and the previously passed level of 1.2350 is the upper limit. An interesting fact is that almost week-long descent did not affect the bearish interest, which persists in the market.
As discussed in the previous review, traders showed little activity inside the accumulation (1.2270/1.2350), which, in principle, is understandable by certain risks. Thus, the work on the breakdown of the existing borders was a priority for the formulation of subsequent trade operations.
Looking at the trading chart in general terms (daily period), we see that the process of restoring quotes has not yet reached 70-80% of working out relative to the elongated correction. Thus, I believe that the full resumption of the global trend is too early. In any case, the downward trend of the pound/dollar pair is the main one, and there are no prerequisites for its change yet.
The news background of the last day had data on UK GDP for the second quarter, where, as expected, there was a slowdown in economic growth from 2.1% to 1.3%, but still it is worth paying tribute, as predicted a slowdown to 1.2%. Other statistical indicators were published simultaneously, and so, the investments of commercial enterprises continue to decline, showing a decline of -1.4%, but again, they predicted an even deeper decline to -1.6%. Lending in Britain is almost kept at the same level, so, taking into account the revised data on the volume of consumer lending, we have a decline from 1.007B to 0.901B, but the number of approved mortgage applications is reduced from 67.01K to 65.55K. The reaction of the pound to the statistical data package was moderate due to the stop and, as a fact, the formation of the accumulation process.
In turn, the information background discusses the Brexit process. So, this time, the newspaper The Times reported on Tuesday night that London would provide Brussels with an official document containing proposals for alternative regulation of the "backstop" problem. Prime Minister Boris Johnson himself informally asks the EU authorities not to grant a delay on Brexit, which would thus put the British Parliament before a choice: to vote for the revised version of the Brexit treaty or leave the EU on October 31 without a deal.
In turn, the UK Ministry of Finance, represented by Chancellor of the Treasury Sajid Javid, says the country is ready for any Brexit option. Such statements should be treated very skeptically since there are simply no foundations for the foundation of such statements.
Today, in terms of the economic calendar, data on business activity in the UK manufacturing sector have already been released, where an increase from 47.4 to 48.3 was recorded. In the second half of the day, the final data on the index of business activity in the manufacturing sector will be published, but in the United States, where growth is forecast from 50.3 to 51.0. Thus, the US dollar may well be strengthened.
Further development
Analyzing the current trading chart, we see that the accumulation process continues its formation, where attempts to break the lower border (1.2270/1.2350), of course, were, but ended unsuccessfully, in the form of a puncture. In turn, speculators continue to analyze the behavior of quotes and, of course, the price fixing point, being currently out of the market.
It is likely to assume that the accumulation process will continue for some time, but the longer we are in the restrictive framework, the sharper the way out of them. The principle of operation remains the same, the analysis of fixation points outside the borders, with subsequent entry into the market.
Based on the above information, we concretize trading recommendations:
- Buy positions are considered in the case of a clear fixation of the price above the level of 1.2350, preferably with an exit of 1.2390.
- We consider selling positions in the case of price fixing below 1.2270 (not a puncture in the shadow), with the prospect of a move to 1.2150.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that the indicators in the short-term intervals fluctuate within the existing accumulation, giving as a fact a variable signal. Intraday and medium-term intervals signal a downward interest, thus reflecting the recovery process.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 1 was built taking into account the time of publication of the article)
The volatility of the current time is 45 points, which is low for this period. It is likely to assume that if the accumulation process is delayed, the volatility will remain at a low level, but as soon as the existing framework of accumulation falls, we will see a local spike in the acceleration of volatility.
Key level
Resistance zones: 1.2350**; 1.2500**; 1.2620; 1.2770**; 1.2880 (1.2865 – 1.2880)**.
Support zones: 1.2150**; 1.2000***; 1.1700; 1.1475**.
* Periodic level
** Range level
*** The article is based on the principle of conducting transactions, with daily adjustments.
