4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: 52.2948
The British pound sterling on Wednesday, January 27, continued to trade quite volatile. The pound/dollar pair remains in the "swing" mode. If earlier it was a "high-volatility swing", now it is just a "swing". This is visible to the naked eye. The pair are constantly tossed from side to side. However, it is not flat, the upward trend persists, and the price continues to settle near its 2.5-year highs. Thus, this movement may continue in the coming days. 100 points down – 150 points up. 150 points down – 150 points up, and so on. Of course, in such conditions, it is extremely inconvenient to trade a pair. Therefore, it may be better to consider trading on lower timeframes. In general, the pound sterling continues to rise in price for unknown reasons. In the last fundamental articles, we put forward a hypothesis in which we outlined the 2 main reasons for the fall of the dollar in the last 10 months. However, if it's all about the dollar, why is the EUR/USD pair correcting downwards at this time, while the GBP/USD pair is not? What is happening in the UK now that the pound sterling stubbornly does not want to get cheaper? Exactly these questions remain unanswered. Because in the UK, in contrast to the same EU, everything remains very bad. Both economically and epidemiologically.
Well, the key event of the last day was the Fed meeting. The first meeting in 2021. The first meeting after the change of the US president. The first speech of the head of the Federal Reserve Jerome Powell in 2021. Before the meeting, many hypotheses were put forward about what decisions could be taken. The announcement of the curtailment of the quantitative stimulus program was also called. Some said that the expansion of the QE program would be announced on the contrary due to the weak economic recovery. However, in the end, neither the first nor the second guessed correctly. The US regulator did not make any important decisions, and Jerome Powell was very reserved at the press conference and did not shine with loud statements. Thus, we can say that the meeting turned out to be completely passable. At an online news conference, Powell said that the US economy is far from fully recovering, and "significant progress will be made only after some time". The head of the Federal Reserve drew attention to the fact that about 9 million Americans remain unemployed due to the pandemic, the levels of employment and inflation are far from the target. According to Powell, the outlook for the US economy remains uncertain. Regarding the coronavirus, Powell reiterated that the pandemic poses the highest risks to the economy, reduces business and economic activity, and makes it difficult to create jobs. Regarding inflation, Powell said that the Fed will not take serious measures if the indicator goes slightly above 2%. This is the essence of the adaptive policy when periods with low inflation will be offset by periods with higher inflation. However, it is still too early to talk about "periods with high inflation".
The US currency strengthened most of the day in anticipation of the results of the meeting. However, in the late afternoon, it began to fall again, as if paying off the debt for strengthening during the morning and Wednesday afternoon. Thus, traders first led the pair down, then up, because the downward movement was unjustified.
The average volatility of the GBP/USD pair is currently 102 points per day. For the pound/dollar pair, this value is "high". On Thursday, January 28, therefore, we expect movement within the channel, limited by the levels of 1.3608 and 1.3810. A reversal of the Heiken Ashi indicator to the top will signal a new round of upward movement within the "swing".
Nearest support levels:
S1 – 1.3672
S2 – 1.3641
S3 – 1.3611
Nearest resistance levels:
R1 – 1.3702
R2 – 1.3733
R3 – 1.3763
Trading recommendations:
The GBP/USD pair on the 4-hour timeframe began a new round of downward movement within the framework of the continuing "swing". Thus, today it is recommended to trade for an increase with the targets of 1.3733 and 1.3763 before the Heiken Ashi indicator turns down if the pair rebounds from the levels of 1.3641 or 1.3611. It is not recommended to consider sell orders now.
