The volatility of pound / dollar has returned to the market again, having an amplitude of 122 points and, as a fact, a breakdown of the holding level. From the point of view of technical analysis, we see that the five-day accumulation within the 1.2500 level did not go in vain and the bulls still managed to regroup the trading forces and, as a fact, break through the ill-fated coordinates of 1.2500, thereby continuing the formation of an oblong correction. To some extent, the past deceleration played the role of a compression spring, where traders were reluctant to designate the formation as a graphic figure of the continuation of the "Rising Triangle".
As discussed in the previous review, traders were in no hurry to work inside the existing accumulation, since working on a breakdown could bring much more profit than jumping in small amplitude. The robot's tactics for breaking down boundaries worked 100%, and traders took the first profit slice in the region of 1.2550 yesterday, moving the stop-loss restrictive order to the optimal risk zone. So congratulations to everyone on their next profit, I think we will not stop there.
Considering the trading chart in general terms (the daily period), we see that the phase of the oblong correction is alive as never before, and the recent breakdown of the level of 1.2500 has proved this to us. If we look in detail at the current correctional movement, we will see that the quote managed to bounce off historical minimums by more than 620 points in some 14 trading days, and this, among other things, 43% of the entire downward measure of the current year. I think it's too early to talk about a change in the global trend, although I really want to shout it out, but do not rush to conclusions, since there are plenty of problems in the English currency.
The news background of the past day contained data on retail sales in the UK, where the previous data was reviewed for the better, from 3.3% to 3.4%, but the current figures were worse than expected, having as a fact a slowdown from 3.4% up to 2.7%. If we consider the macroeconomic statistics for Britain together, then we have nothing good for British sterling, thereby talking about the growth of the quote rate, referring to statistics, is not worth it. As you may have guessed, the main impulse for the growth of the English currency came to us from the information background. Therefore, the head of the European Commission, Jean-Claude Juncker, said in an interview with Sky News that there are chances of concluding an agreement with Britain before October 31.
"I think we can make an agreement. I'm doing everything to conclude a deal because I don't like the idea of an exit without an agreement, "said Jean-Claude Juncker.
At the same time, Junker added that the EU is ready for a "tough" exit, but not sure that Britain is ready.
In turn, London provided Brussels with informal documents with ideas on Brexit. The document deals with issues related to customs, production of goods and sanitary rules, after Britain left the EU. In fact, this document carries the UK response to the ultimatums of the EU, which obliged London to submit its proposals on Brexit by the end of the month. However, formal written decisions will be ready later.
Today, in terms of the economic calendar, we do not have comprehensive statistics for more than one country. Thereby, all movement will be tied exclusively to the information background. Thus, today, the meeting is scheduled for the representative of the European Union, Michel Barnier, with the British Minister for Brexit, Stephen Barclay. The purpose of the meeting is to analyze the very unofficial document that London provided the day before.
The upcoming trading week in terms of the economic calendar is rather boring compared to last, but do not be upset, Thursday and Friday still expects to be interesting.
The most interesting events displayed below --->
Monday, September 22
USA 13:45 Universal time. - Composite index of business activity Markit Sep. (Preliminary): Prev 50.7 ---> Forecast 49.6
Wednesday September 25th
USA 14:00 UTC+00. - New Home Sales (Aug): Prev 635K ---> Forecast 645K
Thursday, September 26
USA 12:30 Universal time - Annual GDP data (Q2): Prev 2.0% ---> Forecast 2.0%
Friday, September 27
USA 12:30 Universal time - Orders for durable goods
Further development
Analyzing the current trading chart, we see that the surge in prices led us to the values of July of the current year, where a small stop was formed. The movement that we saw is more related to the unjustified emotions of market participants against the background of the information flow. Speculators, in turn, continue to hold the remainder of the long position, but are already preparing to restore quotes back to the level of 1.2500.
It is likely to assume that the remaining emotional mood associated with the statements on Brexit may push the quotation in the direction of 1.2600-1.2620, but as soon as the emotions subside, the return phase will not take long.
Based on the above information, we derive trading recommendations:
- If we do not have buy positions, then opening now does not make much sense. If we hold positions, then do not forget to partially exit by moving the stop loss order to breakeven. Further actions will be analyzed after fixing the price above the level of 1.2620.
- Sales positions are considered in the recovery phase, thereby waiting for a clear stop with a reversal.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators on all the main time intervals signal the formation of an oblong correction. In case of a stop, the first signals will be given by the minute and interval indicators.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 20 was built taking into account the time of publication of the article)
The volatility of the current time is 64 points, which is already good for this time section. It is likely to assume that volatility can still grow in the direction of the daily average, but is not yet sure that today we will see again high values in terms of volatility. We follow the news feed.
Key levels
Resistance Zones: 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support areas: 1.2500 **; 1.2350 **; 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
