4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -68.9133
On Friday, the British pound paired with the US dollar fell. However, on Monday, it began to recover. In principle, the movements of the euro/dollar and pound/dollar pairs in recent days are very similar. The only difference is that the movement on the euro/dollar still has a slight downward slope, and the movement on the pound/dollar is the purest flat. Thus, the pound also continues to trade exclusively in its manner - without a clear correction, continuing to remain close to its 3-year highs. Based on this, we can draw an almost obvious conclusion for everyone. If the pair has been standing in one place for a month, then nothing changes for it in fundamental or macroeconomic terms. Consequently, traders still do not find any reason for large purchases of the US currency. Because small purchases may simply not be enough to make the dollar more expensive. We have already said several times that the US currency is declining since the money supply in the US is growing. Thus, now it is not even particularly important which positions are opened by the majority of traders. For example, the latest COT report showed that the major players are currently reducing their positions, rather than increasing them. They're selling off the pound, but so is the dollar. In other words, the "bullish" mood persists but does not increase. It is exactly what we see at this time in the illustrations of the pair's movement. The pound remains near its three-year highs. However, it cannot continue to grow. However, if the Fed continues to saturate the economy with hundreds of billions of dollars, in any case, the dollar will continue to fall in price. At least, that's what the global fundamental picture looks like right now. Unfortunately, many other fundamental factors are simply not taken into account by the markets at this time. We have repeatedly noted that the difficult economic situation in the UK over the past year had virtually no impact on the pound. Traders do not show any concern about the quarrel between London and Brussels, because of which courts may begin between the parties, and further negotiations on various agreements may be suspended. Of course, most of the topics listed above really only "can happen". However, there is an adage "buy on rumors, sell on facts". In any case, the pound is now paying attention only to the news that is frankly in its favor. What is it? A persisting "speculative factor"?
During the trading week that began yesterday, there will be quite a lot of different events in the UK and the US that deserve attention. For example, in the UK, there will be two speeches by the Chairman of the Bank of England, Andrew Bailey. Bailey speaks with enviable regularity, as does Jerome Powell and Christine Lagarde. But important information from these officials comes very rarely. Thus, it is not a fact that Bailey will tell the markets anything important this time. But the report on retail sales in the United States (which will be released today) will be difficult for traders to ignore. This indicator is expected to decrease by 0.3-0.7% compared to April. Any value lower than the forecast may support the British currency, which needs just that to continue to stay inside the 1.4100-1.4220 side channel. Reports on jobless claims, average wages, and the UK unemployment rate will also be published today. We believe that traders will need to pay attention to the report on the number of applications for unemployment benefits. Wednesday will be no less important than Tuesday. Inflation in the UK and the results of the Fed meeting in the US. These events can also greatly affect the movement of the pound/dollar pair. Unfortunately, it is now quite difficult for traders to count on any change in the rhetoric of Jerome Powell. And even more so, it makes no sense to expect the Fed to make any important decisions. Most likely, the meeting will be as thorough as that of the ECB, but perhaps there will still be some news. Well, inflation in Britain may accelerate from April's 1.5% y/y to 1.8% y/y in May. Recall that this value is still below the target level of the Bank of England. Nevertheless, inflation is now one of the most significant indicators for any trader, since it is around inflation that the future actions of all central banks are circling. Thursday and Friday will be relatively boring in macroeconomic terms, but one more or less significant report will still be released – retail sales in Britain.
Thus, in general, the whole week is quite seriously saturated with macroeconomic and fundamental events, which gives hope that traders will still be able to leave the channel 1.4100-1.4220 after a month of being in it. In the meantime, we can note that the quotes once again failed to break through the lower border of the side channel, although this time they fell even below the level of 1.4100. The pound remains heavily overbought, but most of the global factors remain on its side. We can only hope that this week "macroeconomics" and "foundation" will help traders to resume the trend movement.
The average volatility of the GBP/USD pair is currently 77 points per day. For the pound/dollar pair, this value is "average". On Tuesday, June 15, we expect movement within the channel, limited by the levels of 1.4034 and 1.4188. The upward reversal of the Heiken Ashi indicator signals a new round of upward movement within the "swing".
Nearest support levels:
S1 – 1.4099
S2 – 1.4069
S3 – 1.4038
Nearest resistance levels:
R1 – 1.4130
R2 – 1.4160
R3 – 1.4191
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 1.4160 and 1.4191 until the Heiken Ashi indicator turns down. Sell orders should be opened if the Heiken Ashi indicator turns down with a target of 1.4069. The pound now continues to move in an absolute flat, which should be taken into account when opening any positions.
