4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: -2.5129
On Tuesday, the British pound traded more actively than the European currency. The pair's quotes failed to gain a foothold above the moving average line, thus, the current technical picture did not change at all and remained quite confusing in the 4-hour timeframe. If the fundamental and technical picture for the euro looks quite clear and logical, then for the pound sterling everything is exactly the opposite. First, it is unclear what to do with the global correction. After almost a year of an upward trend, the pound/dollar pair corrected only 560 points and the entire trend is more than 2800 points. Secondly, at the moment, it is not clear whether this correction has ended or will continue further? The Murray level of "0/8"-1.3672 withstood the onslaught of the bears, so the pair even formed a "double bottom" pattern, which looks quite convincing and accurate. This factor increases the probability of resuming the upward trend. But at the same time, at the moment, the bulls did not even manage to fix the pair above the moving average. And the whole movement in the last month and a half looks like a "swing", just with a slight downward slope. With the "foundation", the situation is no easier. If there are two global factors for the euro currency that can influence the movement, then for the pound, there is also a "speculative factor", a factor of a failed economic and geopolitical fundamental background from the UK. And it is very difficult to say unequivocally what traders pay attention to and what they do not. For example, yesterday in Britain, a fairly important GDP report was published, which turned out to be slightly worse than expected, but no additional pressure was created on the pound! What is it? A sign of the end of a one-and-a-half-month downward correction? Or simply ignoring the next macroeconomic report?
Meanwhile, the UK is starting to count the first results from Brexit. Recall that the government of the Kingdom continues to sing out all the advantages of Brexit, however, businessmen are increasingly noting the negative consequences of the country's withdrawal from the Alliance. This was clear until December 31, 2020. It couldn't be any different than it is now in Britain. GDP is shrinking, imports and exports are falling, small and medium-sized businesses, especially those focused on supplies to European countries, are experiencing serious problems, and many are on the verge of bankruptcy. The UK economy is experiencing its worst crisis in 300 years. If you do not go into details, then already in the first three months you can see all the necessary changes to draw the appropriate conclusions. We have already talked about the decline in imports and exports to the EU countries. Most of all, this applies to various foods and alcohol. They don't help ordinary households and small businesses too much. Exports of seafood to the EU countries collapsed by almost 90%, alcoholic beverages - by 50-60%, meat - by 80%. Carriers note huge delays at the border, the number of necessary documents, certificates, and permits has increased several times. From London, which has always been considered the financial center of the world, the capital outflow continues, and the volume of GDP that the financial sector brings to the country's treasury also falls. Hannah Essex, Co-Executive Director of the British Chamber of Commerce, said on Monday that she was calling on both sides to sit down at the negotiating table and find solutions that would lower trade barriers for most British exporters.
However, in the UK, not only Brexit is hitting the economy, but also the "coronavirus" pandemic. Recently, it is considered that the situation in the UK with the epidemic has improved. The number of diseases recorded daily is at a minimum, the rate of vaccination is high, and there are no problems with the supply of vaccines. However, we would like to remind you that this has not always been the case, and the UK currently ranks sixth in the world in the total number of diseases since the outbreak of the epidemic. Only France is above it among European countries, and even then only "thanks" to the third "wave" of the epidemic, which began a month ago, and does not exist in the UK. If it were not for this third "wave" in the European Union, it would be Britain that would remain the most affected in Europe from the "coronavirus". Well, how can we not separately recall the "Scottish question" and the "Northern Ireland protocol"? The first problem threatens to flare up immediately after the elections to the Scottish Parliament on May 5. If Nicola Sturgeon's party wins (and many experts believe it does), then the First Minister of Scotland is immediately going to initiate a new independence referendum. It is unclear how Boris Johnson will eventually get permission, but the Scottish government is not going to close this issue. And the "Northern Ireland question" has already flared up. On the island of Ireland, riots and clashes with the police have been going on for more than a week. They are not happy with the government, they are not happy with the implementation of the "Northern Ireland protocol", they are not happy with Brexit and the border that has reappeared on the island. All these are problems for the UK, which in the future can only worsen the economic situation of the country. So far, the pound sterling, in our opinion, continues to balance on the edge of the abyss only due to the "speculative factor" and huge cash injections into the American economy. If it were not for these factors, the pair would most likely already be approaching the 30th level.
The average volatility of the GBP/USD pair is currently 89 points per day. For the pound/dollar pair, this value is "average". On Wednesday, April 14, therefore, we expect movement within the channel, limited by the levels of 1.3654 and 1.3832. The reversal of the Heiken Ashi indicator back down may signal the resumption of the downward movement.
Nearest support levels:
S1 – 1.3733
S2 – 1.3702
S3 – 1.3672
Nearest resistance levels:
R1 – 1.3763
R2 – 1.3794
R3 – 1.3824
Trading recommendations:
The GBP/USD pair has started an upward correction on the 4-hour timeframe, however, the price is still below the moving average. Thus, today it is recommended to open new sell orders with targets of 1.3702 and 1.3672 in the event of a price rebound from the moving average. Buy orders should be opened in case of overcoming the moving average with the targets of 1.3824 and 1.3855 and keep them open until the Heiken Ashi indicator turns down.
