From a complex analysis perspective, we see a rapid downward movement, during which the quotes almost managed to work out the previous measure. The quotes managed to get 400 points in five trading days, in which the movement grew from a slight pullback, similar to an oblong correction. So, having a scale was enough to return the quotes to the flat formation area a period earlier, and only 96 points remained to the key level of 1.2150. Now we understand that a downward mood is not just an assumption, it is perhaps a development in terms of recovery.
Regarding the theory of further development, we continue to talk about a downward course, since the first level of 1.2350 has already fallen, and the main coordinates of 1.2150 are not at such a great distance. Thus, the recovery theory regarding the movement of 03.20.20-14.04.20 takes place on the market, and as soon as the 1.2150 mark is reached, we will have a solid basis, and confirmation will occur at the level of 50% of mining [1.2000].
At the same time, while we do not have these levels, the tactics of local operations are preserved among market participants.
Analyzing the past day in detail, you can see that a turn of meek positions was set during the Asian session, but the main acceleration came at 07: 30-16: 00, time at the trading terminal. The subsequent fluctuation occurred in terms of a pullback from 1.2246 to 1.2308.
As discussed in the previous review, traders were actively working to lower even from the breakdown of the 1.2405 / 1.2520 corridor, resulting in a significant increase in the trade deposit.
In terms of volatility, we see the first acceleration in three days, which exceeded the daily average by 30%. Activity is caused by the external background, as well as speculative activity.
Details of volatility: Monday - 165 points; Tuesday - 245 points; Wednesday - 172 points; Thursday - 358 points; Friday - 359 points; Monday - 144 points; Tuesday - 271 points; Wednesday - 676 points; Thursday - 354 points; Friday - 522 points; Monday - 267 points; Tuesday - 296 points; Wednesday - 333 points; Thursday - 452 points; Friday - 352 points; Monday - 148 points; Tuesday - 227 points; Wednesday - 108 points; Thursday - 126 points; Friday - 198 points; Monday - 116 points; Tuesday - 217 points; Wednesday - 131 points; Thursday - 122 points; Friday - 42 points; Monday - 87 points; Tuesday - 146 points; Wednesday - 193 points; Thursday - 119 points; Friday - 114 points; Monday - 86 points; Tuesday - 198 points. Daily average
Considering the trading chart in general terms [the daily period], we see the outlines of the graphic model "Head and Shoulders", where, with the existing fluctuation, it remains to form only the right shoulder.
The news background of the past day contained data on the labor market in Britain, where they published figures on applications for unemployment benefits for March. Everyone was waiting for the repetition of the American plot and hundreds of thousands of applications, but as a result, they received some 12.5 thousand with a forecast of 272 thousand. What is the reason for the discrepancy in the statistical data? So, the indicators were collected on March 12, 11 days before the government introduced quarantine, which paralyzed most of the British economy, limiting its impact on economic prospects. Thus, everyone understands that when publishing subsequent data on applications, everyone will face reality, and it will be extremely cruel.
Pound Sterling continued to decline, without focusing on locally positive statistics.
At the same time, media sources, the Bloomberg resource, in particular, began to portion-launch information about problems with mortgage loans in Britain. Sources give a comparison with the 2008 crisis, where a similar mechanism could trigger a crisis in Britain, and we know very well how the real estate market in the United Kingdom has grown in recent years. That is, mortgage borrowers will not be able to fulfill the obligations in connection with quarantine measures, you caught the promise.
In terms of general informational background, we have a statement by Bank of England chief economist Andy Haldane, who believes that the influence of the COVID-19 virus at the end of March will be quite strong, and this can lead to a reduction in the economy of Britain in the first quarter.
Haldane also added that he did not rule out a sharp economic downturn in the second quarter, but recovery should not be expected quickly.
"But even after quarantine is weakened, there is certainly a possibility that people themselves will not want to spend too much or go out and talk too much," the Bank of England chief economist said.
Earlier this week, UK Treasury Chancellor Rishi Sunak launched a 1.25 billion pound company support package, so on the first day, more than 140 thousand companies sought help, where the total cost of requests was about 1 billion pounds. It is worth considering that the number of companies can still grow and the Chancellor of the Treasury is ready for this, in his words.
Today, in terms of the economic calendar, we had inflation data in Britain, where the forecasts coincided and a decrease was recorded from 1.7% to 1.5%. Further, statistics are no longer expected.
Further development
Analyzing the current trading chart, we see a technical rebound after a significant downward move. In fact, the quotes again focused on the level of 1.2350, which may play into the hands of sellers if it is worked out in terms of resistance. Thus, the theory of downward development is still relevant, and we need to wait a bit until sellers manage to regroup trade forces.
By analyzing the time interval per minute, we consolidate a round of long positions at the start of the European session, where the quotes managed to return to the area of 1.2350.
In terms of the emotional mood of market participants, speculative positions are indisputable, but in the case of passing the 1.2150 mark, we will see a tide of medium-term participants.
In turn, traders continue to consider short positions with the initial move in the direction of the local minimum of the past day.
We can assume that in the case of working out the level of 1.2350 as resistance, we will quickly reach the area of 1.2250 / 1.2280, and after that, we will talk about touching the main level of 1.2150.
Based on the above information, we derive trading recommendations:
- Consider selling positions lower than 1.2330, towards 1.2280 - 1.2250. Major deals will go after prices consolidate lower than 1.2240.
- Consider purchase positions in terms of alternative positions, in the case of keeping the mood and price consolidation higher than 1.2370.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments on hourly and daily periods signal a sale, which reflects a general interest.
Volatility per week / Measurement of volatility: Month; Quarter year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(April 22 was built taking into account the time of publication of the article)
The volatility of the current time is 94 points, which is 38% below the daily average. It can be assumed that, given the speculative mood, there is a chance to disperse volatility to an average norm.
Key levels
Resistance zones: 1.2350 **; 1.2500; 1.2620; 1.2725 *; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1.2280 (1.2240); 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
