From the point of view of a comprehensive analysis, we see a return of the quote to the base point on February 20, and now let's talk about the details. The psychological level of 1.3000 was able to play the role of resistance, slowing down the corrective course and, as a fact, setting a round of downward positions. In fact, we got 100% of the correctional move [02.20.20-25.02.20], where the quote came close to the base [1.2848], and most importantly, the average level of 1.2885 no longer puts pressure on the quote. Thus, the judgment that downward interest remains in the market is confirmed by the existing fluctuation.
Regarding the theory of downward development, we see that the quote is quite fixed at new levels, where the fact of a change in the clock component is undeniably confirmed by the market itself. The oscillation within the price range 1.2770 // 1.2885 // 1.3000 has been maintained for almost three weeks, where the quote passes the coordinates 1.2885 without undue effort, which is a good sign for further descent to the main frame 1.2770. Regarding the lower border, not everything is so simple, since its breakdown will mean not just a change in the clock component, but a signal about the restoration of the initial downward stroke. Thus, characteristic pressure on the pound sterling is necessary here and so, I am waiting for this lever from the upcoming negotiations between England and Brussels, where noise may rise again,
In terms of volatility, I did not see any drastic changes in the past day. We slowed down on Tuesday and Wednesday, but activity is still close to the daily average, and this is a good sign for market stability.
Details of volatility: Tuesday - 103 points; Wednesday - 115 points; Thursday - 86 points. The average daily indicator relative to the dynamics of volatility is 95 points [see table of volatility at the end of the article].
Detailing minute by minute, we see that the main turn of the downward movement occurred in the period 7: 30-10: 00 [UTC + 00 time on the trading terminal]. Subsequent swings were in a 50% recovery relative to the early downward trend while completion was expressed in a floating flat 1.2865 / 1.2895.
As discussed in the previous review, traders considered a further downward movement, having trading operations even from a value of 1.2975, topping up was lower than 1.2885. In turn, medium-term traders are always in downward positions.
The recommendation from Thursday regarding the possible entry into short positions in case of fixing the price lower than 1.2885 brought additional income to existing transactions.
[Sell positions are considered in case of price fixing lower than 1.2885, with the prospect of a move to 1.2855-1.2770.]
Considering the trading chart in general terms [the daily period], we see that the downward development still has a chance of implementation, since fixing the price in the range of 1.2885 // 1.3000 already has its weight.
The news background of the past day included a second preliminary estimate of the United States GDP for the fourth quarter, where economic growth was expected to accelerate to 2.3%, but the forecasts did not coincide and the level of GDP remained 2.1%. At the same time, data were published on applications for unemployment benefits in the United States, where there were practically no changes, -1 thousand [Repeat: -9 thousand; Primary +8 thousand.].
The reaction of the market was indirectly in favor of strengthening the dollar against the pound.
In terms of the general informational background, we have news that the UK has published a mandate for a negotiating position on a future trade agreement with the EU after Brexit. The main points of the mandate were access to a free market, cooperation in the field of aviation, fisheries, financial services, transport and telecommunications.
"No matter what happens, the government will not negotiate any arrangements in which Britain cannot control its own laws and political life. This means that we will not agree with any obligations to bring our laws in line with EU law and so that the EU institutions , including the court, have any jurisdiction in the UK, "the document emphasizes.
As we can see from the excerpt of the document, Boris Johnson's initiative regarding the legal side is included in the mandate, which will undoubtedly affect the negotiations.
Negotiations will definitely be difficult, which will cause a wave of new noise, we should not forget that the EU countries account for 45% of British exports, and the United Kingdom - 53% of exports from European countries.
In turn, the risk of exit without a deal increased again after criteria and terms for reaching agreements were entered into the document.
The statement said that the British government hopes that the main directions of the agreement will be determined by June. If this does not happen, the government will have to decide whether to shift the attention of the United Kingdom from negotiations to the ongoing preparations for leaving the EU without an agreement.
Today, in terms of the economic calendar, we have data on income / expenses of individuals in the United States, where significant changes are not expected.
The upcoming trading week in terms of the economic calendar starts with PMI data, after which we have an ADP report on the level of employment, and last is the report of the United States Department of Labor, But, this is not all, since negotiations between England and Brussels on the future trade start next week agreement after Brexit.
The most interesting events are displayed below --->
Monday, March 2
Great Britain 9:30 Universal time - Manufacturing PMI (Feb): Prev 50.0 ---> Forecast 49.8
USA 15:30 Universal time - Manufacturing PMI from ISM (Feb): Prev 47.2 ---> Forecast 50.2
Tuesday March 3
Great Britain 9:30 Universal time - Index of business activity in the construction sector (Feb): Prev 48.4 ---> Forecast 46.6
Wednesday, March 4
Great Britain 9:30 Universal time - Business activity index in the services sector (Feb): Prev 53.9 ---> Forecast 53.3
USA 13:15 Universal time - ADP Report on the level of employment in the private sector (Feb): Prev 291.1K ---> Forecast 191K
Thursday, March 5
USA 13:30 Universal time - applications for unemployment benefits
Friday March 6th
USA 13:30 Universal time - report of the United States Department of Labor
Further development
Analyzing the current trading chart, we see all the same movement in a conditional side range, where the floating borders expanded slightly towards the minimum of the previous day [1.2858 / 1.2895]. In fact, the quote is trying to overcome the flat, but is faced with a variable support, which was set on February 20. In the current situation with the negotiations, it can be assumed that a further decrease in the pound is only a point in time, and the theory of medium-term downward development has the right to be noticed.
From the point of view of the emotional mood, we see that the rate of speculative operations is still high, which is confirmed by the characteristic behavior of the quote.
By detailing the time interval that we have per minute, we see a movement in the side course, where a local surge of activity was recorded at the start of the European session.
In turn, intraday traders are waiting to overcome the low of December 20, as this will be considered the starting point for the move towards the main boundary of 1.2770.
Having a general picture of actions, it is possible to assume that the movement in the conditional side range of 1.2858 / 1.2895 will still remain in the market, where the main strategy is to monitor the downward movement, or rather, fixing the price is lower than 1.2848 [H4]. Alternative operations are considered against the background of the next rebound and price fixing higher than 1.2900.
Based on the above information, we derive trading recommendations:
- Local buy positions are considered in case of price fixing higher than 1.2900, with the prospect of a move to 1.2955.
- Sell positions are considered if the price is fixed lower than 1.2848, with the prospect of a movement to 1.2820-1.2800 --- 1.2770, the move is in the form of steps.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments relative to all time intervals signal a sale. It is worth considering that when the price moves inside an alternating flat, indicators may not be stable with respect to minute and hour periods.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(February 28 was built taking into account the time of publication of the article)
The volatility of the current time is 38 points, which is a low value for this time section. It is likely to assume that market activity will remain stable and will be equal to the daily average.
Key levels
Resistance Zones: 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support areas: 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
