4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 16.5484
On May 26, the British pound rose sharply against the US dollar, and yesterday, it also fell sharply. Thus, we draw the same conclusions as before. Buyers of the pound now have very little strength, and there are even fewer fundamental reasons for strengthening the British currency. At the moment, the quotes of the pound/dollar pair have returned to the moving average line, so the trend has not changed to a downward one yet. However, we believe that in the current conditions, it is a new downward movement that is more likely. However, if the price rebounds from the moving average, the bulls will remain in the market and at least one more round of upward movement may follow.
While the pound has resumed its decline, and there is no important news coming from the UK, the United States is blowing for two. Although, it is better to say, "Donald Trump blows for everyone". We have repeatedly written and said that most of the statements, comments, and tweets in social networks from the American President are not confirmed by anything and frankly mislead readers, not being the truth. It seems that even the social network Twitter, through which the American President likes to make statements, made a similar conclusion and under the last message of Donald Trump put a mark "possibly fake". From our point of view, this is just the highest point of absurdity that Trump could reach in his statements. The very same message from the leader of the American nation said that the elections by voting by mail, not only "can", but also "will" be falsified. Trump said that many people will receive ballots regardless of how they got to a particular state. After Trump himself noticed the marking of Twitter, he immediately criticized the social network, saying: "Twitter is now interfering in the 2020 presidential election. They say that my claim about postal voting ballots, which will lead to massive corruption and fraud, is false. Twitter is completely stifling free speech, and I, as President, will not allow this to happen."
At the same time, for the first time in a long time, the main opponent of Trump in the presidential election, Joe Biden, went on the air. Earlier, the two politicians met at a Memorial Day ceremony, where Biden appeared in a protective mask, and Trump himself – without. Naturally, it was not without "pricks" from the current president. Donald Trump expressed surprise that the Democrat put on a medical mask, although only his wife was with him. Later, he retweeted a photo of Biden in a mask, trying to make fun of the politician himself. Joseph Biden responded rather sharply: "He's a fool, an absolute fool. Presidents should lead, not engage in nonsense and show false masculinity. It costs people their lives." Biden also noted that the leader of the nation should set an example to ordinary citizens, which Trump not only does not do but also manages to belittle those who follow the advice of doctors during the epidemic, which has already killed almost 100 thousand people in the United States.
Meanwhile, the conflict between China and the US continues to grow. However, this time we are not talking about a trade standoff and not about Washington's claims to Beijing because of the spread of the "coronavirus", but because of the situation in Hong Kong. Recall that before the pandemic in this district of China, which in 1984 achieved autonomy, there were mass protests against new amendments to the law that allowed the extradition of any resident of Hong Kong to China. These laws were intended to strengthen Beijing's influence in the region. Simply put, China wants to control Hong Kong as completely as possible, which, of course, the US, which supported the protesters, is not happy about. Now that the epidemic has subsided, protests have resumed in Hong Kong against China's already new national security bill, which allows Chinese authorities to apply general legislation in the region, as well as prohibits foreign interference in the territory's affairs. US National Security Adviser Robert O'Brien has already said that sanctions could be imposed against China and Hong Kong if the law is passed. "It seems that with this national security law, they are going to take over Hong Kong, and if they do, Secretary of State Mike Pompeo will most likely not be able to confirm that Hong Kong retains a high degree of autonomy, and if that happens, sanctions will be imposed against Hong Kong and China," O'Brien said. China's actions were also condemned in the UK, Canada, Australia, and the European Union, reminding Beijing that in 1985 a declaration was signed with the UK that guarantees Hong Kong autonomy. It is also reported that the presidential administration is already preparing to impose sanctions on Chinese officials, as well as various companies and financial organizations. Trump himself, during a regular briefing at the White House, announced measures against China over Hong Kong: "We're doing something right now. I think you will find this very interesting, but I will not talk about it today, I will talk about it in a few days. I think it will be very powerful." The official representative of the Chinese Foreign Ministry said in turn that Beijing will continue to protect China's national interests. "We will resolutely not allow foreign political forces to interfere in Hong Kong's affairs," the Foreign Ministry said.
While passions are raging in the United States, the Foggy Albion remains complete news "calm". For the entire current week in the UK, not a single macroeconomic report is planned. Thus, today, traders will have to pay attention only to American statistics, which will be quite a large number. The most interesting and important reports will be on applications for unemployment benefits and on orders for durable goods. From the UK, we are waiting for new information about the future plans of the Bank of England, as the latest information indicated that the regulator may introduce negative rates, which greatly scared buyers of the British currency, which are now so few in the market.
The average volatility of the pound/dollar pair has increased due to the last two days and is now 101 points. However, this is still a low value for the British pound. On Thursday, May 28, thus, we expect movement within the channel, limited by the levels of 1.2148 and 1.2350. A reversal of the Heiken Ashi indicator upwards will indicate a possible new round of upward movement. Fixing the price below the moving average will confirm some randomness of the recent growth of the pound.
Nearest support levels:
S1 – 1.2207
S2 – 1.2146
S3 – 1.2085
Nearest resistance levels:
R1 – 1.2268
R2 – 1.2329
R3 – 1.2290
Trading recommendations:
The pound/dollar pair adjusted to the moving average on the 4-hour timeframe. Thus, today it is recommended to trade the pound/dollar pair for an increase with the goals of 1.2329 and 1.2350, in the case of a reversal of the Heiken Ashi indicator up. It is recommended to sell the pound/dollar pair when the bears manage to return to the area below the moving average, with the first targets of 1.2207 and 1.2146.
