4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -12.2902
The British pound paired with the US dollar continues the "swing" on which it has been riding for more than three weeks. Last Thursday, the pound/dollar pair and the euro/dollar pair significantly declined. However, on Friday, it recovered almost all the losses of the previous day. Thus, nothing has changed. It can be seen that the pair is within a minimal price range. Therefore, there is no technical reason to expect a change in the overall picture of things at this time. It is still very difficult for the American currency to rise in price. We have listed the reasons a million times already, and they have not changed recently. Some hope that when central banks begin to scale back their quantitative easing programs and raise rates, something will change. But when will it be? The markets are now clinging to the topic of possible tightening of monetary policy by the Fed, the ECB, and the Bank of England. However, the ECB did not give any signals about such a step at all. However, traders need something to build on when building long-term strategies. Therefore, inflation indicators, the timing of the possible completion of QE programs, and so on are now being used. However, all this will happen someday. Therefore, these factors do not influence the overall trend. Such topics and news on these topics can only have a local impact on a particular currency. For example, if Andrew Bailey says tomorrow that BA is ready to raise the rate by the end of the year, this will certainly support the British pound. But what will change for the pound/dollar pair in this regard? It's been growing for 15 months already. Let's say Jerome Powell openly announces a rate increase (although various surveys of Fed officials say that in America, they expect an increase no earlier than 2023), and then what? The dollar will strengthen by 100-150 points, but will the global upward trend end? From our point of view, no. The global factors that continue to influence the US currency are too strong. Therefore, before the end of 2021, it does not even make sense to expect strong growth of the dollar.
By the way, traders are now strenuously ignoring many different topics. And they ignore them quite logically. Even the topic of the trade war between the United States and China, which began a few years ago, had only a background effect on the dollar. After all, the most important thing is the macroeconomic indicators. What is the difference between the trade relations between Washington and Beijing? The main thing is how their economies develop, whether the gap between their GDP decreases or increases.
Another thing is the UK, which continues to receive "punches" from fate. After Brexit ended, many thought that the worst was finally behind them. However, at the beginning of 2021, riots began on the island of Ireland, which threatened to break out with a new force at any moment. The "Scottish" question will be a nightmare for Boris Johnson for a long time to come. After all, we all know that if someone wants to separate, then it is unlikely that someone will give up their idea if the opposing side is against it. There are a lot of examples in the last ten years. At least the same Catalonia. Thus, the second question is whether Boris Johnson is in favor or not of the new independence referendum in Scotland. The first question is the desire of the Scots themselves. Nothing prevents them from holding a referendum and separating from England. London does not recognize this branch. The courts and all sorts of proceedings will begin. Perhaps some Malays will refuse to recognize the legitimacy of the referendum. But again, how many such examples have there been in recent years alone? Many world leaders also declined to identify Lukashenko as a legitimate president, so what? He remains in power in Belarus. Economic ties between Belarus and the rest of the world are practically intact because money and the economy are much more important than who the president is in the country and how the internal elections were held in it. Thus, Scotland may present more than one surprise to London in the next couple of years. Plus, do not forget that the European Union supports the return of Scotland to its composition. Therefore, it will provide full support to Edinburgh and its leader Nicola Sturgeon.
In general, the fundamental background for the British pound remains weak. But it will only be reflected on the charts of currency pairs when global factors, such as the infusion of trillions of dollars into the American economy, cease to operate. When the "crisis" factors stop working, then they will begin to influence the usual factors that everyone was used to before the pandemic and the global crisis. But again, this is not the prospect of the next couple of months. From a purely technical point of view, at this time, it is not even possible to build a clear side channel to trade from its borders. Moreover, the movement is so "swing-like" that overcoming any channel boundary does not guarantee the beginning of a new trend. Therefore, we recommend at this time to pay more attention to the lower timeframes, where trading is still a little more convenient.
The average volatility of the GBP/USD pair is currently 93 points per day. For the pound/dollar pair, this value is "average." On Monday, June 7, we expect movement within the channel, limited by the levels of 1.4064 and 1.4250. A reversal of the Heiken Ashi indicator back down will signal a new round of downward movement within the "swing."
Nearest support levels:
S1 – 1.4160
S2 – 1.4130
S3 – 1.4099
Nearest resistance levels:
R1 – 1.4191
R2 – 1.4221
R3 – 1.4252
Trading recommendations:
The GBP/USD pair has started a new round of upward movement on the 4-hour timeframe. Thus, today it is recommended to stay in buy orders with targets of 1.4221 and 1.4252 until the Heiken Ashi indicator turns down. Sell orders should be opened in the event of a reversal of the Heiken Ashi indicator downwards with targets of 1.4130 and 1.4099. The pound now continues to move flat.
