From the point of view of complex analysis, you can see the accumulation process within the variable support, and now let's talk about the details.
The trading week is coming to an end and it's time to sum up the preliminary results. So, the dream of followers of the upward development is moving further and further away, and the quote of pound sterling is already in the recovery stage from the range level of 1.2770, which did not yield to buyers for the second week in a row. The quote has not just returned to the previous range 1.2150//1.2350//1.2620, but also has generated more than 65% of the total upward impulse, which means that the speculative mood played a bad joke again before strategic operations.
Is it worth upsetting that the transition to a new range of oscillations [1.2150 // 1.2350 // 1.2620 ---> 1.2770 // 1.3000 // 1.3300] is postponed indefinitely? Absolutely not, because we are in the market for only one purpose - to make money, and now the main tactic of traders is local operations due to the enormous emotional mood of the market.
Thus, following the principles of reading the technical picture of the market, comparing this with the external and emotional background, a trading decision was made in terms of local positions for each individual time period.
Analyzing the past trading day every minute, you can see that there was a surge in short positions, on the basis of which the quote managed to break through the level of 1.2500 and declined to the level of 1.2401. The greatest speculative activity was recorded from 11:00 [UTC+00 time on the trading terminal], which is associated with the information and news background.
As discussed in the previous review, traders expected a similar development and surge in activity, so short positions lower than 1.2500 were opened in the direction of 1.1450-1.1350.
The trading recommendation of Thursday regarding the positions for sale coincided, having a profit on the trading deposit.
In terms of volatility, everything goes as usual, on Wednesday, the first slowdown in nine trading days was recorded [76 points], which was a signal of the concentration of trading forces before a new jump in activity. Thursday was on the wave of speculators, where the concentration of trading forces a day earlier gave the market dynamics, and as a result, daily activity was 164 points, which is 28% higher than the daily average. This pattern is combined with the technical, fundamental, and emotional components of the market.
Considering the trading chart in general terms, the daily period, it is worth noting that a similar dynamic in terms of the reverse move last occurred on May 1.
The focus of the news background on the last day was the meeting of the Bank of England, during which the refinancing rate was left at 0.1%, and the program of quantitative easing was expanded to 745 billion pounds.
Market participants were ready for this development, but they were upset by something else: the regulator regards the current unemployment rate as a lack of desire for the British to move on after the pandemic, and the available statistics are reduced to an anomaly from the point of view of the Central Bank, and unemployment can continue to grow, as it was at first with the West. In other words, the Bank of England signaled in this not quite clever way that by the end of the year we may see a reduction in the refinancing rate with a transition to the negative zone.
"Recent data indicate that the fall in world GDP in the second quarter of 2020 will be less serious than expected during the May report on monetary policy," the regulator said in a statement.
Naturally, investors saw this promise and speculators just did their job, so the pound declined.
[Be aware of all the trends, see how the meeting of the Bank of England influenced the European currency, a fresh review is available on the LINK ]
Today, in terms of the economic calendar, we have data on retail sales in the United Kingdom, which turned out to be much better than expected, an increase of 12% in May, but this is probably due to the gradual weakening of quarantine measures in this period. In annual terms, retail sales continue to be in the negative zone -13.1%.
There was no market reaction to the data on Britain so the pound still remains at the level of the minimum of the past day.
The upcoming trading week in terms of the economic calendar is full of statistics, where they expect preliminary PMI indicators for June, as well as the final data on US GDP.
At the same time, do not forget that the external background, in particular the Brexit divorce proceedings, still puts pressure on the market.
The most interesting events displayed below (Universal Time) --->
Monday, June 22
USA 14:00 - Sales in the secondary housing market in May
Tuesday, June 23
EU 8:00 - Index of business activity in the Markit services sector for June, PRELIMINARY
EU 8:00 - Markit Manufacturing PMI for June, PRELIMINARY
USA 13:45 - Index of business activity in the services sector for June, PRELIMINARY
USA 13:45 - Index of business activity in the manufacturing sector for June, PRELIMINARY
USA 14:00 - Sales of new housing in May
Thursday June 25th
USA 12:30 - Basic orders for durable goods (m / m) for May
USA 12:30 - GDP for the 1st quarter
USA 12:30 - Applications for unemployment benefits
Further development
Analyzing the current trading chart, we can see the slowdown after last day's rally, where the quote fluctuates within the variable range of 1.2400 / 1.1450, which indicates a regrouping of trading forces. Keeping the price in a downward cycle indicates that the recovery process has not yet reached its goal, which means that movement within the previous range of 1.2150 // 1.2350 // 1.2620 will still be relevant in the market.
In terms of the emotional mood of the market, we can consider the desire of speculators for further jumps, which is confirmed by the existing stop where the regrouping of trading forces takes place.
It can be assumed that in case the price consolidates below 1.2400, the downward movement will resume, where amid new speculations, the quote will return to the average level of 1.2350, which confirms the theory of movement in the previous range once again.
An alternative scenario will be considered if the price consolidates above 1.2460, which will signal a price return to the area of 1.2500 during the pullback.
Based on the above information, we derive trading recommendations:
- Consider buy deals in case of price consolidation above the level of 1.2460, in the direction of 1.2500 - 1.2550.
- Consider sell deals in case of price consolidation below the level of 1.2400, with the prospect of a move to 1.2350.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the performance of technical instruments on minute and hour periods signal a sale due to the concentration of the price at the level of 1.2400. On the other hand, the daily period changed the buy-sell signal for the first time in a long time as soon as the quote managed to pass the level of 1.2500.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(June 19 was built taking into account the time of publication of the article)
The volatility of the current time is 50 points, which is 60% lower than the daily average. It can be assumed that if the downward trend continues, speculative activity will lead to an increased volatility at times.
Key levels
Resistance Zones: 1.2500; 1.2620; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Zones: 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1,1000; 1,0800; 1.0500; 1.0000.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
