Over the past trading day, the pound / dollar currency pair showed a high volatility of 138 points. However, this is not the main thing, the quotation rushed to the psychological level that held us for a long time. From the point of view of technical analysis, we see a rapid downward course, where the periodic level of 1.2150 could not resist and after a short stagnation was broken by the price. The gradual accumulation of trading forces led to the fact that sellers still managed to overcome the ambiguous mood of the market, accumulating forces in a single direction.
As discussed in the previous review, speculative traders started entering short positions since Friday, and on Monday, all the remaining mass burst into sales. What can I say, I congratulate everyone on the next profit. Our previously set forecast coincided 100% and the quotation has already moved closer to the milestone, with a solid profit. Considering the trading chart in general terms (the daily period), we see that the correction cycle has been fully played back and the quote has broken through the key psychological level of 1.2000, enabling the global downward trend to continue to develop.
The news background of the past day contained data on business activity in the manufacturing sector in Britain, where everything is not so good. PMI is reduced from 48.0 to 47.4 with a growth forecast of 48.4. An extremely weak report in the manufacturing sector is just one of the factors of pressure on the English currency, since the information background is most clearly reflected in the trading chart. Therefore, the noise regarding the suspension of the parliament is gaining new momentum every day. John McDonnell, the "Minister of Finance" of the shadow cabinet of the opposition Labor Party, announced on Sunday (September 1) that the British MPs will present a plan to prevent the United Kingdom from leaving the EU without an agreement on conditions on Tuesday.
"Deputies with many years of experience are now exploring the possibility of how, on Tuesday, Wednesday and Thursday, we can introduce a legislative measure that will allow us to prevent the development of the Brexit scenario with the absence of a deal without parliament approval. The appropriate method will be presented on Tuesday, "said John McDonnell to the media.
Prime Minister Boris Johnson, in turn, showed a willingness to fight back by announcing his intention to hold the October 14 elections if the British Parliament begins the process of adopting a law prohibiting him from leaving the EU without a deal on Tuesday. At the same time, speaking at 10 Downing Street, Johnson said attempts to delay Brexit are pointless. "There are no circumstances in which I would ask Brussels for a postponement," the prime minister added.
Today, in terms of the informational background, all attention is focused on parliament, since, having returned from the summer holidays, the deputies have only a few days to confront Boris Johnson, thereby all shouts, comments and criticism will be directly reflected on the chart. In terms of the news background, there will be data on business activity in the UK construction sector, where there should not be any cardinal changes. In the United States, data on business activity in the manufacturing sector from ISM will be released, where PMI should remain at the level of the previous period 51.1. In our case, the news background will be in the background under the onslaught of the information background.
Further development
Analyzing the current trading chart, we see that the pound is writing a new story to itself in the form of the formation of new historical lows. Thus, the level of 1.1986 from 2017 has already fallen, and the demand for short positions exceeds the supply. In turn, traders can not get enough of the opportunities that British politicians give them. Speculators have already earned enormous profit, and Brexit's confusion and fear drives the pound further to the bottom, building up more and more short positions.
It is likely to assume that a further decline is a point in time. I do not exclude that with the injection of FOMO we will increasingly strive to conquer levels such as 1.1850-1.1700-1.1500. It is only necessary to take into account such a moment that local surges in this scenario will most likely occur upon receipt of this or that information. Thereby, you need to be prepared for them when placing restrictive orders of the stop-loss type.
Based on the above information, we derive trading recommendations:
- Buying positions are considered in the form of variable bursts, and it is probably worth working for shorter time periods (H1), analyzing the information background along the way. It should be understood that the downward interest is colossal and these positions are considered as variables.
- If we do not already have sales positions, it is better to enter after a rollback (local), possibly after returning to 1.2000 (+ 20 / 60p). In the case of forcing the information background, the input / topping can be considered relative to the current minimum. Now traders short positions are considered the main goal.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators unanimously at all the main time intervals, signal a further decrease. In the analysis, it is worth considering such that, with local bursts, indicators at shorter time intervals can arbitrarily jump, misleading traders.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 3 was built taking into account the time of publication of the article)
The volatility of the current time is 109 points, which already exceeds the average daily indicator by 19%. It is likely to assume that if there is a decrease in information pressure, the volatility of the day can be compressed in the already existing framework.
Key levels
Resistance zones: 1.2000 ***; 1.2150 **; 1.2350 **; 1.2430; 1.2500; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support Areas: 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** The article is built on the principle of conducting a transaction, with daily adjustment
